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2025 DIGILAW 74 (CAL)

Steel Authority of India Ltd. v. Ld. Controlling Authority

2025-01-14

RAVI KRISHAN KAPUR

body2025
JUDGMENT : Ravi Krishan Kapur J. 1. The petitioner employer assails an order dated 11 January, 2017 directing payment of an amount of Rs.14,85,448/- as gratuity under section 4 of the Payment of Gratuity Act 1972 alongwith the notice dated 11 January 2017 in Form R and the consequential show cause notice dated 18 May 2017 passed in Case No pg/10/2015/ALCR (SAIL, ASP vs Smt Swasti Ghosh). The petitioner also prays for directions on the respondent no.2 to vacate and surrender the residential accommodation provided by the petitioner which continues to be unauthorisedly occupied by the respondent no.2. 2. Briefly, the husband of the respondent no.2, Mohan Kumar Ghosh was an employee of the Alloy Steel Plant a unit of Steel Authority of India Limited (SAIL) and retired on 31 December, 2014. During the course of his employment, he was allotted premises No.6, Sarat Chandra Avenue, Durgapur Steel Township for his residential accommodation which he was obliged to vacate within two months of his retirement. 3. Shortly after his retirement in January 2015, the said Mohan Kumar Ghosh was paid his outstanding dues on account of provident fund alongwith interest aggregating to Rs.23,46,147/- and Rs.21,557/-respectively. Subsequently, in March 2015 he claimed gratuity before the Controlling Authority without vacating the above quarters. 4. Significantly, sometime in April 2015, Mohan Kumar Ghosh had requested the Competent Authority for a lease or license in respect of the above residential quarters. The request was considered and rejected informing him that such retention could only be permitted for two months with an additional period of two months on special grounds and at an enhanced rent. 5. In January, 2017, the Controlling Authority disposed of an application filed by the respondent no.2 and passed the impugned order directing the petitioner to pay gratuity amounting to Rs.14,85,448/-. Thereafter, the Controlling Authority issued a notice for issuance of the impugned certificate for recovery of the gratuity amount alongwith compound interest. The principal grievance of the petitioner is that the impugned order was passed in violation of the principles of natural justice and without any notice to the petitioner. In any event, there are no reasons in the impugned order which makes the same unsustainable. 6. The principal grievance of the petitioner is that the impugned order was passed in violation of the principles of natural justice and without any notice to the petitioner. In any event, there are no reasons in the impugned order which makes the same unsustainable. 6. It is contended that the petitioner is an "integral company" under the Public Sector Iron and Steel Companies (Restructuring) and Miscellaneous Provisions Act, 1978 and has its own Gratuity Fund under section 20 of the Act which provides for higher benefits than what is payable under the Act in respect of non-executive employees. It is further alleged that in 2014, when Mohan Kumar Ghosh had retired, the ceiling limit under the SAIL Gratuity Rules was Rs. 10,00,000/-. However, the respondent no.2 has been awarded Rs.14,85,448/- which is more than the amount prescribed. It is urged that clause 3.2.1 (c) of SAIL Gratuity Rules also recognizes withholding of such gratuity for non-compliance of the Company Rules including failing to vacate the company accommodation, and that no interest is payable on such gratuity amount for the period of unauthorized occupation. The Rules have also been promulgated in order to safeguard the petitioner against the exploitation by an ex-employee or his family members post his death. Since the rent, electricity and water charges are being borne by the petitioner and the same continue to accumulate there is no way of securing such amount. 7. It is also contended that the normal monthly rent for the above accommodation at the relevant point of time was Rs. 3,697/-. As such, an amount of Rs. 4.13 lacs has accrued only on account of occupational charges from the respondent no.2. There are also outstanding additional dues on account of penal charges which continue to accumulate with little hope of recovery. Only electricity bills raised at a nominal flat rate till 2021 have been paid by the respondent no.2. However, recovery of such amount is subject to the final bill as per the actual meter reading at the time of surrender which is also conditional. It is further alleged that no notice of the application dated 21 July 2016 was served on the petitioner before passing of the impugned order. As such, the impugned order dated 11 January 2017 passed by the Controlling Authority is in violation of the principles of natural justice. 8. It is further alleged that no notice of the application dated 21 July 2016 was served on the petitioner before passing of the impugned order. As such, the impugned order dated 11 January 2017 passed by the Controlling Authority is in violation of the principles of natural justice. 8. On behalf of the respondent, it is contended that the writ is not maintainable since the petitioner has failed to avail of the statutory alternative remedy of appeal provided under section 7(7) of the Act. The husband of the respondent no.2 became entitled to gratuity under section 4(1) of the Act upon completing continuous service of 36 years 1 month and 11 days. His services were never terminated. In any event, there is no provision for forfeiture of gratuity. It is further contended that the SAIL Gratuity Rules have no statutory force and are inapplicable. In any event, the retention of quarters is no reason to withhold any amount on account of gratuity of an ex-employee. Moreover, in view of the clear mandate of section 14 of the Act, the provisions of the Act have an overriding effect over the SAIL Gratuity Rules. In support of such contentions, the respondent relies on Wazir Chand vs Union of India and Ors, (2001) 6 SCC 596 and Gorakhpur University vs Dr Shitla Prasad Nagendra (2001) 6 SCC 591 . 9. Admittedly, the impugned order has been passed on an application which had not been served on the petitioner and no notice of the same had been given to the petitioner. Moreover, there are no reasons in the impugned order. In passing the impugned order, the Controlling Authority was bound to give reasons. In the absence of any reason, the impugned order is unsustainable. Reasons discuss how the mind has been applied to the matters in issue and conveys the nexus between the matters which have been considered and the conclusion based thereon. [UPSC vs. Bibhu Prasad (2021) 4 SCC 516 . 10. There is also no merit in the contention that the petitioner has an alternative remedy under section 7(7) of the Act. The impugned order has been passed in violation of principles of natural justice and without any reasons. It is well settled that the existence of an alternative remedy is not an absolute bar to the maintainability of a writ petition under Article 226 of the Constitution. The impugned order has been passed in violation of principles of natural justice and without any reasons. It is well settled that the existence of an alternative remedy is not an absolute bar to the maintainability of a writ petition under Article 226 of the Constitution. A writ petition can always be entertained where there is (i) a breach of fundamental rights; (ii) a violation of the principles of natural justice; (iii) a jurisdictional error; or (iv) a challenge to the vires of the statute or delegated legislation (Commissioner of State Tax v. Commercial Steel Ltd., (2022) 16 SCC 447). 11. Insofar as the grievance of the petitioner pertaining to the respondent no.2 wrongfully and unauthorisedly withholding the property belonging to the petitioner is concerned, there is a clear statutory alternative remedy provided in section 630 of the Companies Act, 1956 (now section 452 of the Companies Act, 2013). Section 452 of the Companies Act 2013 inter alia provides as follows: 452. Punishment for wrongful withholding of property - (1) If any officer or employee of a company— (a) wrongfully obtains possession of any property, including cash of the company; or (b) having any such property including cash in his possession, wrongfully withholds it or knowingly applies it for the purposes other than those expressed or directed in the articles and authorised by this Act, he shall, on the complaint of the company or of any member or creditor or contributory thereof, be punishable with fine which shall not be less than one lakh rupees but which may extend to five lakh rupees. (2) The Court trying an offence under sub-section (1) may also order such officer or employee to deliver up or refund, within a time to be fixed by it, any such property or cash wrongfully obtained or wrongfully withheld or knowingly misapplied, the benefits that have been derived from such property or cash or in default, to undergo imprisonment for a term which may extend to two years. [Provided that the imprisonment of such officer or employee, as the case may be, shall not be ordered for wrongful possession or withholding of a dwelling unit, if the court is satisfied that the company has not paid to that officer or employee, as the case may be, any amount relating to— (a) provident fund, pension fund, gratuity fund or any other fund for the welfare of its officers or employees, maintained by the company; (b) compensation or liability for compensation under the Workmen's Compensation Act, 1923 (19 of 1923) in respect of death or disablement.] 12. On a plain reading of the above section, there is a speedy and summary procedure provided for retrieving the property of a company where it has been wrongfully retained by an officer of the company after termination of his employment. In Lalita Jalan vs. Bombay Gas Company Limited (2003) 6 SCC 107 it has been held as follows: 22. The view expressed in J.K. (Bombay) Ltd. [ (2001) 2 SCC 700 : 2001 SCC (Cri) 393] runs counter to the view expressed in Abhilash Vinodkumar Jain [ (1995) 3 SCC 732 : 1995 SCC (Cri) 590] wherein it has been clearly held that the object of Section 630 of the Act is to retrieve the property of the company where wrongful holding of the property is done by an employee, present or past, or heirs of the deceased employee or officer or anyone claiming the occupancy through such employee or officer. The view expressed in Abhilash Vinodkumar Jain [ (1995) 3 SCC 732 : 1995 SCC (Cri) 590] clearly subserves the object of the Act which is to the effect of recovering the possession of the property belonging to the company. If it is held that other members of the family of the employee or officer or any person not connected with the family who came into possession through such employee would not be covered by Section 630 of the Act, such a view will defeat the quick and expeditious remedy provided therein. The basic objection to this view is that the aforesaid provision contained in Section 630 of the Act is penal in nature and must be strictly construed and therefore the actual words used should not be given any expansive meaning. The basic objection to this view is that the aforesaid provision contained in Section 630 of the Act is penal in nature and must be strictly construed and therefore the actual words used should not be given any expansive meaning. A provision of this nature is for the purpose of recovery of the property and if, in spite of demand or subsequent order of the court, the possession of the property is not returned to the company, the question of imposing penalty will arise. Similar provisions are available even under the Code of Civil Procedure. In execution of a decree for recovery of money or enforcement of an injunction, the judgment-debtor can be committed to a prison. Such a provision by itself will not convert the civil proceeding into a criminal one. Even assuming that the said provision is criminal in nature, the penalty will be attracted in the event of not complying with the demand of the recovery of the possession or pursuant to an order made thereof. The possession of the property by an employee or anyone claiming through him of such property is unlawful and recovery of the same on the pain of being committed to a prison or payment of fine cannot be stated to be unreasonable or irrational or unfair so as to attract the rigour of Article 21 of the Constitution. If the object of the provision of Section 630 of the Act is borne in mind, the expansive meaning given to the expression “employee or anyone claiming through him” will not be unrelated to the object of the provision nor is it so far fetched as to become unconstitutional. Therefore, with profound respects the view expressed in J.K. (Bombay) Ltd. [ (2001) 2 SCC 700 : 2001 SCC (Cri) 393] in our opinion is not correct and the view expressed in Abhilash Vinod Kumar Jain [ (1995) 3 SCC 732 : 1995 SCC (Cri) 590] is justified and should be accepted in interpreting the provision of Section 630 of the Act. 13. In view of the above, the petitioner has an available statutory remedy under section 452 of the Companies Act, 2013 and there are no reasons as to why the petitioner company has chosen not to avail the same. 13. In view of the above, the petitioner has an available statutory remedy under section 452 of the Companies Act, 2013 and there are no reasons as to why the petitioner company has chosen not to avail the same. To this extent, the petitioner company has only itself to blame for not taking any timely action against such delinquent ex-employees and their family members. This also demonstrates a lack of bonafides of the petitioner company in protecting public premises and for recovery of their legitimate dues from their ex-employees. 14. During the hearing of this writ petition, by an order dated September 5, 2024 the petitioner was directed to deposit the entire sum of Rs.14,85,448/- claimed as gratuity with the Registrar General, High Court on the assurance that upon such deposit being made, the respondent no.2 would handover immediate physical possession of the above company quarters. Pursuant to the order dated September 5, 2024, the petitioner had deposited the above amount. Thereafter, on 18 September 2024 the respondent no.2 had expressed an intention not to handover the company quarters. In view of the unfair stand of the respondent no.2, there is no purpose in the above amount being left lying deposited in Court. In view of the above, the petitioner company is permitted to forthwith withdraw the said amount of Rs. 14,85,448/-alongwith any accrued interest forthwith. For such purposes, the Registrar General, High Court is directed to encash the fixed deposit lying in terms of the order dated September 5, 2024. 15. In view of the above, the impugned order is unsustainable and is set aside. All consequential steps taken pursuant to the impugned order including issuance of the showcase notice dated 18 May 2017 are also set aside and quashed. There shall be a direction on the Controlling Authority to reconsider the matter afresh after giving a right of hearing to both the petitioner and the respondent no.2. It is made clear that the above exercise should be completed within a period of four weeks from date. Insofar as the grievance of the petitioner against the respondent no.2 for illegal retention of the company’s property is concerned, the petitioner is directed to take necessary and expeditious steps in accordance with law including availing of the statutory remedy under section 452 of the Companies Act 2013. Insofar as the grievance of the petitioner against the respondent no.2 for illegal retention of the company’s property is concerned, the petitioner is directed to take necessary and expeditious steps in accordance with law including availing of the statutory remedy under section 452 of the Companies Act 2013. With the above directions and to the above extent only, W.P.A No 26418 of 2017 stands allowed.