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2013 DIGILAW 779 (CAL)

Hindustan Copper Limited v. Dinabandhu Satapathy

2013-10-08

SAMBUDDHA CHAKRABARTI

body2013
Judgment : Sambuddha Chakrabarti, J. By the present writ petition the petitioner has inter alia prayed for a writ in the nature of Mandamus commanding the respondents to recall and revoke to the extent the orders impugned direct payment of interest to the respondent no. 1 from the date of his superannuation from service of the petitioner company. The question that has cropped up for consideration is whether the petitioner company was justified in withholding the payment of gratuity to the respondent no. 1 during the pendency of the disciplinary proceeding in terms of Hindusthan Copper Limited (Conduct, Discipline & Appeal) Rules of 1979 (the Rules, for short). The petitioner is a Government company to which the provisions of the Payment of Gratuity Act, 1972 (the Act, for short) apply. The respondent no. 1 joined National Aluminum Company in the year 1982. In the year 2005 he was transferred to the petitioner company as a Director (Personnel) and his gratuity amount from his former employer was also transferred to the petitioner company. His service conditions were governed by the Rules. On July 22, 2009 the petitioner issued a charge-sheet to the respondent no. 1 while he was acting as the Director (Personnel) in the matter of selection of an officer and also showing relaxation of selection criteria in favour of some employees at the time of his recruitment. During the pendency of the disciplinary proceeding that followed the said respondent had attained the age of superannuation on July 31, 2009. The respondent no. 1 filed a claim application for gratuity to the petitioner company and subsequently before the respondent no. 3, i.e., the Assistant Labour Commissioner (Central), Kolkata and the Controlling Authority under the Act. By a finding dated May 21, 2012 the said respondent no.3 allowed the claim of the respondent no. 1. It has been determined that the gratuity payable to the respondent no. 1 is Rs. 10 lacs and the petitioner herein was further directed to pay simple interest at the rate of 12 per cent. on the gratuity amount for the period from August 1, 2009. The petitioner thereafter filed a statutory appeal challenging the order of the controlling authority. In the meantime the disciplinary proceeding ended in the imposition of minor penalty of censure. 10 lacs and the petitioner herein was further directed to pay simple interest at the rate of 12 per cent. on the gratuity amount for the period from August 1, 2009. The petitioner thereafter filed a statutory appeal challenging the order of the controlling authority. In the meantime the disciplinary proceeding ended in the imposition of minor penalty of censure. Since the petitioner had preferred the statutory appeal by depositing the principal amount of gratuity as well as interest it requested the appellate authority to release the principal amount to the petitioner no. 1 and to refund the interest amount to the company. The respondent no. 2 by an order dated December 31, 2012 rejected the contention of the petitioner holding that the gratuity was payable to the respondent no. 1 only after the completion of the disciplinary proceeding and also refused to disallow the interest under the Act. In other words it was held that the respondent no. 1 was eligible for gratuity along with simple interest at the rate of 12 per cent. The orders of the controlling authority and the appellate authority are both under challenge in the present writ petition. According to the petitioner the respondent no. 1 was governed by the Rules of the company and this clearly permitted withholding of gratuity till the disciplinary proceedings were concluded against the employee. The said Rules have been annexed to the writ petition as Annexure P-1. Rule 30.O (iv) permits continuance of the disciplinary proceeding even after the retirement of an employee if such proceeding had been instituted while the employee was in service. Since the petitioner was in service when the disciplinary proceeding was initiated against him this provision of the Rules is clearly applicable to the present case. Rule 30(e) on the other hand empowers the disciplinary authority to pass orders of dismissal or removal from service or for forfeiture of terminal benefits including the gratuity where the charges are proved. It may be mentioned that none of the respondents had filed any affidavit-in-opposition to controvert the allegations of the petitioner. In fact, on April 25, 2013 the learned advocate for the respondent no. 1 even submitted that the said respondent did not wish to use any affidavit and the writ petition might be treated as ready for hearing on the basis of the pleadings made therein. In fact, on April 25, 2013 the learned advocate for the respondent no. 1 even submitted that the said respondent did not wish to use any affidavit and the writ petition might be treated as ready for hearing on the basis of the pleadings made therein. It may be mentioned that at the final hearing the respondent no. 1 did not appear. Mr. Majumdar, the learned advocate for the petitioner, had submitted that the question is with regard to the date on which gratuity would be payable to the respondent no. 1. It may be mentioned that the appellate authority by the order impugned in the writ petition had referred to Section 7(3) of the Act which requires an employer to arrange to pay the amount of gratuity within 30 days from the date it becomes payable. The appellate authority found that the respondent no. 1 had not been paid his gratuity as per the entitlements in terms of Section 4(1)(a) of the Act. It was further held that since the service of the respondent no. 1 has not been terminated on any of the grounds mentioned in Section 4(6)(b) of the Act there was no proof of any willful action or negligence causing damage or loss to or destruction of property etc in course of his employment. The appellate authority observed that gratuity had been withheld in terms of the petitioners, Rules which have been approved Board of Directors of the company and not under the Act. He referred to Section 14 of the said Act as having effect over anything inconsistent therewith contained in any enactment other than the Act or any instrument or contract having effect by virtue of any enactment other than the Act. The contention of the appellant company was turned down as in terms of Section 7(2) an employer is required to determine the amount of gratuity as soon as it becomes payable and is required to give a notice in writing to the person to whom gratuity is payable and as well as the controlling authority specifying the amount of gratuity so determined. The appellate authority had found that the respondent no. 1 herein was eligible for gratuity along with simple interest at the rate of 12 per cent for the period from August 1, 2009, i.e, the day next after the day he retired. The appellate authority had found that the respondent no. 1 herein was eligible for gratuity along with simple interest at the rate of 12 per cent for the period from August 1, 2009, i.e, the day next after the day he retired. Undoubtedly Rule 30(4)(c) of the Conduct Rules of the company empowers the petitioner to withhold the gratuity due to an employee till finalisation of the disciplinary proceedings. Once the respondent No.1 was found to be guilty at the enquiry the liability to pay gratuity cannot relate back to the date of superannuation. According to the petitioners the claim for gratuity can only be determined under the provisions of the said rules. This Court agrees with the submissions of the petitioner that the dispute regarding the liability to pay gratuity continued till the conclusion of the disciplinary proceedings i.e., November 9, 2012 and on December 7, 2012 the petitioner offered the amount of gratuity without interest. According to the petitioners gratuity became payable only on November 10, 2012, i.e., after the penalty order was imposed and the same was offered within 30 days from which it became payable which is the time specified by Section 7(3) of the Act. As such the petitioner had offered it within the time fixed by the Act and there is no question of payment of interest. There is sufficient substance in the submission of the petitioner. In the case of Y. K. Singla –Vs.- Punjab National Bank and Others, reported in (2013) 3 SCC 472 the Supreme Court had held that gratuity can be withheld in terms of the rules of the employer in case the employee failed to satisfy the fault ingredient. It was held in that case that in view of the Regulation 46 of the Punjab National Bank Pension Regulations it was open to the bank not to pay gratuity till culmination of the proceedings pending against the appellant therein. Therefore, non-release of gratuity to the appellant after he had retired from employment till his acquittal by the Sub-Judge, CBI Court, on October 31, 2009 could not be faulted. In such view of it I find sufficient merit in the writ petition and the same is allowed. The orders impugned in the writ petition passed by the controlling authority and the appellate authority respectively are quashed. The respondents nos. In such view of it I find sufficient merit in the writ petition and the same is allowed. The orders impugned in the writ petition passed by the controlling authority and the appellate authority respectively are quashed. The respondents nos. 2 and 3 are directed to release the principal amount of gratuity to the respondent no. 1 and to refund the amount of interest deposited with the said authorities to the petitioner company within four weeks from the date of the communication of the order. There shall, however, be no order as to costs. Urgent Photostat certified copy of this order, if applied for, be supplied to the parties on priority basis upon compliance of all requisite formalities.