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2011 DIGILAW 1441 (CAL)

BIMALENDU CHATTOPADHYAY v. STATE BANK OF INDIA

2011-11-24

ANIRUDDHA BOSE

body2011
JUDGMENT ANIRUDDHA BOSE, J.:- 1. The writ petitioner, an erstwhile employee of the State Bank of India has approached this Court primarily for a direction upon his employer to make payment of interest on delayed payment of his salary and certain other emoluments for a certain period during which he was kept under suspension. The writ petition has been filed after his superannuation. While he was in service, an order of suspension was issued against him and he was subjected to a disciplinary proceeding on allegations of certain irregularities. He was placed under suspension with effect from 11 March 1992. In the disciplinary proceeding, charges were issued against him on forty five counts. After enquiry, the disciplinary authority found nineteen of the charges conclusively proved and three of them partly proved. He was imposed punishment of “Reduction of middle management cadre scale-II” and he was placed at the initial stage of time scale. It was also decided by the disciplinary authority that no salary and allowance, increments etc. other than the subsisting allowance already released to him would be paid to him during the period of his suspension. 2. Appeal was filed by the petitioner within the hierarchy of the administrative authorities of the bank but the appeal was dismissed. The petitioner thereafter filed a review petition before the Review Committee of the bank itself. The Reviewing authority in substance did not interfere with the finding of the Disciplinary and the Appellate authority. The penalty imposed against him however was modified and the Review Committee of the bank reduced the penalty, directing reduction of pay by four stages with cumulative effect in the time scale in Middle Management Grade Scale III. The Review Committee also directed that the period of suspension may also be treated as on duty. The petitioner was paid arrear salary and allowance from 12 March 1992 to 7 May 1997 after reduction of subsistence allowance already paid to him. The petitioner was informed of the order of the Review Committee was on 31 December 2001. 3. The petitioner has superannuated from his service on 31st March, 2002 and has been paid his retiral benefits. The petitioner was paid arrear salary and allowance from 12 March 1992 to 7 May 1997 after reduction of subsistence allowance already paid to him. The petitioner was informed of the order of the Review Committee was on 31 December 2001. 3. The petitioner has superannuated from his service on 31st March, 2002 and has been paid his retiral benefits. After his superannuation the petitioner made a claim for interest at the rate of 18 per cent on overdue amount for the period during which he remained suspended but was subsequently paid arrear pay and allowance as per the direction of the Review Committee. It is also the case of the petitioner that the petitioner became entitled to additional allowance on passing two parts of the CAIIB examination to the tune of Rs.250/- per month but while making payment of the salary and allowance during his period of suspension, the said sum was left out. The other allowance the petitioner claims was not computed was officiating allowance he was receiving on the ground that he was officiating as Development Officer (P & SB), zonal office, Kolkata. After his retirement, the petitioner started making representations for clearance of his full dues as also interest on the overdue amount. Such representations were made on 12th April, 2002, 15th November 2002 and 24th December, 2002. Formal demand for justice was sent on 20th April 2003. The root of his demand under these heads was direction of the Review Committee that he was to be treated on duty during his period of suspension, and argument of the petitioner is that such direction invalidates the order of suspension. 4. The respondent bank has questioned the legality of the claim of the petitioner made after he superannuated from service and received his retiral dues without raising any protest. It has been argued on behalf of the bank that this petition has been filed as an afterthought. On merit, it has been submitted that the petitioner is not entitled to any sum as interest on overdue amount, as the obligation on the part of the bank to pay him full salary during the period he remained under suspension accrued only after the order of the Review Committee was passed. Dismissal of this writ petition has also been sought on the ground that adjudication of this proceeding involves dealing with disputed questions of fact. 5. Dismissal of this writ petition has also been sought on the ground that adjudication of this proceeding involves dealing with disputed questions of fact. 5. I shall first deal with the question as to whether the petitioner became disentitled to relief as prayed for in this writ petition after having received his retiral dues without raising any protest. In my opinion, receiving retiral dues by the petitioner cannot per se constitute waiver of his right to claim interest provided otherwise he has a legitimate claim over interest. For this purpose one would have to look at the conduct of the petitioner from the perspective of an employee and not a seasoned commercial litigant. The petitioner superannuated within three months from the date he received the order of the Review Committee, and a retiring employee cannot be expected to stake his claim for interest within such a short period of time while in the process of superannuation. Ordinarily, a service holder depends on his retiral dues for his survival after he superannuates, and is always in a rush to receive his dues after his superannuation. If such claim is not otherwise barred under the law of limitation, I do not think on equitable ground I can reject the claim of the petitioner in this perspective, unless there was express waiver of his claim for interest. There was no such express waiver in the case of the petitioner. And this writ petition has been filed within a year from the date of final rejection of his claim and hence is not barred under the law of limitation. It is the admitted position that the authorities had issued the communication rejecting his claim for interest on 24th February 2003, and the writ petition was filed on 9th January, 2004. The conduct of the petitioner on the basis of which the respondents want me to reject the claims of the petitioner however would have impact on the rate of interest and the heads of accounts on which he has claimed interest, and I shall deal with this issue later in my judgment. I however decline to non-suit the petitioner on the ground that adjudication of this proceeding involves disputed questions of fact. I however decline to non-suit the petitioner on the ground that adjudication of this proceeding involves disputed questions of fact. What has been argued by the petitioner before me is the question as to whether he would be entitled to be entitled to interest on the overdue sum he received in terms of the decision of the Review Committee of the bank, and this question has been argued on the basis of admitted facts only. 6. Now I shall deal with the question as to whether there is legal basis for the claim of the petitioner for interest on overdue amount. There are altogether four sources in law through which interest can be claimed. It can be claimed under the Interest Act. Interest also can be demanded in terms of contract subsisting between the claimant and the opposite party or on the basis of service regulation in a case of this nature. The third source of interest under law can be awarded is by the Court in a subsisting litigation in terms of the provisions of Section 34 of the Code of Civil Procedure. Interest can also be granted under the principles of equity and in this case, interest is being claimed on equitable ground only. The reason why such interest can be granted was considered in a judgment of this Court delivered on 22 December 2008 in the case of Sri. Anil Kr. Saha Vs. The Board of Councilors of Nawadeep unicipality & Ors. reported in [( 2009) 4 CHN 694]. In this judgment it was observed;-. “. Interest is essentially earning capacity of money. In the event someone is deprived of certain amount of money due to him on the count of rendering service to the municipality for a long period of time, he remains deprived of the benefit of the sum of money during this period. The municipality during this period gets to enjoy the earning power of such sum of money, to which they are not entitled to. The claim of the petitioner for interest in reality is for compensation for being deprived of his right to enjoy his legitimate dues. In this case, I found no valid reason for non-payment of his legitimate dues. The municipality during this period gets to enjoy the earning power of such sum of money, to which they are not entitled to. The claim of the petitioner for interest in reality is for compensation for being deprived of his right to enjoy his legitimate dues. In this case, I found no valid reason for non-payment of his legitimate dues. On equitable grounds, in my opinion the petitioner would be entitled to interest at the rate of 9% per annum to be computed from lapse of three months from the date of his retirement on all outstanding dues, to be computed till the date such sum is received by the petitioner.” 7. In this case, question arises as to whether the petitioner became entitled to receive his entire salary and allowance during the period he remained under suspension or his right to receive full salary and allowance during the period he remained under suspension accrued only after the decision of the Review Committee. The petitioner was placed under suspension pending departmental enquiry. The administrative hierarchy within the set up of the bank found the petitioner to be entitled to be treated on duty during his period of suspension. As a result, the petitioner became entitled to full salary and allowance during his period of suspension. Though the Review Committee did not clear the petitioner from the charges which were found to be proved and partly proved, the punishment of the petitioner was modified, and made lighter. One of the modifications was that his period of suspension was to be treated as duty period, whereas the disciplinary authority had directed that no salary and allowances and increments shall be paid to him other than subsistence allowance already received by him. Thus, the effect or impact of his suspension in substance was wiped out by the Review Committee. It can be reasonably presumed from the decision of the Review Committee that they found his suspension to be unjust in proportion to his guilt and that is why he was treated to be on duty during the period of his suspension and payment of full salary and allowance during this period was directed. His suspension was in contemplation of enquiry and was not imposed as punishment. His suspension was in contemplation of enquiry and was not imposed as punishment. It assumed the character of punishment only after the Disciplinary authority directed that he was not to receive any salary, allowance and increments barring subsistence allowance during his period of suspension. The power to suspend an employee in contemplation of enquiry vests in the authorities under the relevant rules and is acknowledged in service jurisprudence as legitimate power. In the event later on the authorities exonerate a delinquent officer or impose punishment of minor in nature but directs restoration of his benefits during his period of suspension, then the impact of suspension, as I have observed in the earlier part of this judgment, gets effaced out. In my opinion this is what has happened in this case. 8. Main case for the respondents is that right of the petitioner to receive full salary and allowance during the period he remained under suspension accrued only after the order was passed by the Review Committee. On the strength of this argument, the respondent bank sought to sanctify suspension of the petitioner and negate the claim for interest made by him for any period prior to the date on which the order of the Review Committee was made. It has also been contended that the petitioner is not entitled to interest as the service regulation does not contemplate payment of interest on such overdue amount as the petitioner has not been exonerated of the charges. The decision of Supreme Court in the case of Bank of India vs. K. Mohandas reported in [ (2009)5 SCC 313 was relied on behalf of the bank to reject the claim of the petitioner for interest. But this decision does not lay down in absolute terms that interest ought not to be paid to an employee on overdue amount. This was a case dealing with the question as to whether certain period of service ought to be treated as qualifying service or not for the purpose of entitling an employee to come under a pension scheme when he obtained voluntary retirement. The Supreme Court allowed the claim of the employees but did not award interest. 9. In the cases of Executive Engineer, Dhenkanal Minor Irrigation Division, Orissa Vs. N. C. Budharaj reported in [ 2001(2) SCC 721 ] and United India Insurance Co. Ltd. Vs. Patricia Jean Mahajan & Ors. The Supreme Court allowed the claim of the employees but did not award interest. 9. In the cases of Executive Engineer, Dhenkanal Minor Irrigation Division, Orissa Vs. N. C. Budharaj reported in [ 2001(2) SCC 721 ] and United India Insurance Co. Ltd. Vs. Patricia Jean Mahajan & Ors. reported in[(2002)6SCC 281] the jurisdiction of the Arbitrator and the Court to award interest was examined by the Supreme Court and in none of these decisions it has been held that the Court would be divested of its jurisdiction to award interest on equitable ground. On the other hand, in the case of South Eastern Coalfields Ltd. Vs. State of M.P. reported in [ (2003)8 SCC 648 ], Court’s jurisdiction to award interest on equitable term has been upheld. In a later decision involving insurance claim, LIC of India vs. Sindhu reported in [ (2006)5 SCC 258 ], the Supreme Court has dealt with the question as to when interest may be awarded on equitable ground. It has been held in this Case:- “Even assuming that interest can be awarded on grounds of equity, it can be awarded only on the reduced sum to be quantified and paid from the date when it becomes due under the policy (that is on the date of death of the assured) and not from any earlier date.” 10. In the case of Clariant International Ltd. Vs. Securities & Exchange Board of India reported in (2004) 8 SCC 524 . Thus Hon’ble Supreme Court held:- “30. Interest can be awarded in terms of an agreement or statutory provisions. It can also be awarded by reason of usage or trade having the force of law or on equitable considerations. Interest cannot be awarded by way of damages except in cases where money due is wrongfully withheld and there an equitable grounds therefor, for which a written demand is mandatory. 31. In absence of any agreement or statutory provision or a mercantile usage, interest payable can be only at the market rate. Such interest is payable upon establishment of totality of circumstances justifying exercise of such equitable jurisdiction. (See Municipal Corpn. Of Delhi v. Sushila Devi 11, SCC para 16.)” 11. A Division Bench judgment of this Court in the case of APO No. 309 of 2009 (Punjab national Bank & Ors. Vs. Such interest is payable upon establishment of totality of circumstances justifying exercise of such equitable jurisdiction. (See Municipal Corpn. Of Delhi v. Sushila Devi 11, SCC para 16.)” 11. A Division Bench judgment of this Court in the case of APO No. 309 of 2009 (Punjab national Bank & Ors. Vs. Subhasini Das & Ors.) decided on 24 December 2010 also dealt with the same issue and jurisdiction of the Court to award interest on equitable ground, as had been directed by the Single Judge has been confirmed in this judgment. Learned Counsel for the petitioner has also relied on a judgment of the Punjab and Haryana High Court in the case of R. S. Sehgal vs. Union of India & Ors. reported in [1985(2) SLR 285] in support of his claim for interest. In this judgment, an order of compulsory retirement of the petitioner and proceeding initiated against him was quashed and the authorities were directed to pay interest at the rate of 12% per annum on the amount which was withheld by the authorities because of such proceeding and consequential order of compulsory retirement. 12. In this proceeding, since the Review Committee of the bank themselves had directed payment of salary and allowance during the suspension period, in my opinion the petitioner became entitled to such salary and allowance notionally during the period of time he remained under suspension. On behalf of the respondents, it was argued that since in this case charges against the petitioner was proved and finding on that count was not interfered with by the Review Committee, the petitioner would not be entitled to interest on the overdue amount. But I do not think this factor would not make any difference so far as claim of petitioner for interest is concerned. What has to be looked at in this case is whether the petitioner was entitled his full salary during the period he stood suspended. Once the Review Committee has directed in favour of the petitioner on that count, in my opinion the petitioner’s right to get his salary and other benefits accrued notionally in the months he remained under suspension. 13. Once the Review Committee has directed in favour of the petitioner on that count, in my opinion the petitioner’s right to get his salary and other benefits accrued notionally in the months he remained under suspension. 13. If I apply the ratio of the judgment of Anil Saha (supra) in this perspective, then in my view the petitioner had become deprived of his legitimate dues during the period he remained under suspension in terms of full salary and allowance and he ought to be compensated for this delay in payment of such salary and allowance by way of interest. I accept the contention of the bank that he was suspended under the regulations of the bank. But it does not automatically follow when an authority exercises certain power within his jurisdiction that such power has been exercised in a valid and legal manner. In this case, the Review Committee by directing payment of full salary to the petitioner for the period he remained under suspension has negated the decision of the Disciplinary and the Appellate Authority to deny him such benefits. The petitioner’s right to receive such salary and other emoluments accrued when such salary became due under normal circumstances, that is during the period he remained under suspension. The order of the Review Committee has directed as such on the day they passed the order, but the date of the order cannot be the date of accrual of right of the petitioner. Thus, the amount, being the differential between what he was entitled to during that period and what he received as subsistence allowance, became overdue and the petitioner is entitled to interest in respect thereof. The petitioner should also be restored the benefits in terms of increment if he was entitled to such increment had the order of suspension not being there. The petitioner’s dues under this head should also be recomputed by the bank. I reject the claim of the petitioner for special allowance which it is submitted he was entitled to for acting as Development Officer as during that period he did not officiate as such. I also do not direct payment of any interest on the sum paid beyond time towards provident fund contribution, as claimed by the petitioner in this proceeding. 14. I also do not direct payment of any interest on the sum paid beyond time towards provident fund contribution, as claimed by the petitioner in this proceeding. 14. I am also of the view that interest in a case of this nature cannot result in windfall for the petitioner and such interest also cannot be penal. Rather, such interest shall be compensatory in nature. Moreover, while exercising its equitable jurisdiction, the Court has wide discretion in fixing the rate of interest as well as the heads on which such interest shall be awarded. In this case, the petitioner has not challenged the order of the Review Committee. Neither he made claim for interest immediately after receiving the order of the Review Committee, but waited till his retiral dues were cleared. I have found such delay to be justified so as not to forfeit the claim of the petitioner over interest altogether, and I have discussed in earlier part of this judgment why I am of such opinion. But such delay in my view would have the impact on the rate of interest I shall direct to be paid to the petitioner, and the heads of the overdue amount under which I shall direct payment of interest. 15. I accordingly direct payment of interest to the petitioner on the differential sum between his actual entitlement of salary and other emoluments during the period he remained under suspension and what he has already received as subsistence allowance at the rate of 8.5% per annum to be calculated at the simple rate uptil the date he was paid arrear salary and other dues in terms of the direction of the Review Committee. Before making such computation of interest, the petitioner’s entitlement to receive special allowance for having cleared both parts of CAIIB examination shall be ascertained and arrived at and if any sum is found due under that head, interest at the same rate shall also be computed on such sum as well. The petitioner’s pensionary benefits shall be fixed accordingly. For the reasons discussed in the preceding paragraph, I do not direct payment of interest under any other head. Computation of dues of the petitioner shall be made within a period of eight weeks from the date this order is communicated to the petitioner and payment thereof shall be made within a further period of two weeks. 16. For the reasons discussed in the preceding paragraph, I do not direct payment of interest under any other head. Computation of dues of the petitioner shall be made within a period of eight weeks from the date this order is communicated to the petitioner and payment thereof shall be made within a further period of two weeks. 16. The writ petition stands allowed in the above terms, but without any order as to costs. 17. Urgent Photostat certified copy of this judgment be supplied to the learned Advocates for the parties, if applied for, with necessary formalities as expeditiously as possible.