WG CDR. ASHWINI KUMAR HANDA (RETD.) v. UNION OF INDIA & Ors.

#2. The appellant herein while working with the Indian Airforce in the rank of Wing Commander has applied for and was granted study leave for a period of two years i.e. from December 27, 2003 to December 26, 2005. At that time, he had submitted an undertaking in the form of a Service Guarantee Certificate to the effect that he would serve for nine years from the date of his return from study leave. On this undertaking, the appellant was also given pay and allowance for the period of study leave. After his return, he started serving but before the completion of nine years period, applied for premature retirement on health grounds. His request for premature retirement was accepted. At the same time, the pay and allowances drawn by the appellant during the period of study leave was deducted from his post retirement dues on the ground that he had committed breach of contract by not serving for nine years.

#3. The appellant challenged the order of recovery of pay and allowances by filing the Original Application (OA) before the Armed Forces Tribunal (AFT) which has been dismissed by the AFT vide order dated July 26, 2017. The plea of the appellant before the AFT was that once he was allowed to retire prematurely on medical grounds, his undertaking contained in service guarantee certificate furnished on November 15, 2001 could not have been enforced. The AFT has, however, dismissed the OA preferred by the appellant assigning the reason that the medical ground was taken by the appellant as an additional ground and it was not the sole or main ground for premature retirement. According to the AFT, the main ground for release was entirely different and his premature release was not ordered on the ground of illness. Relevant portion of the order of the AFT is reproduced below: “13. Thus, from the above facts, it is abundantly clear that the study leave rules mandate that after completing the study leave period, the Applicant will have to serve for a specific period of service. The Applicant was aware of this fact from the very beginning and as per the Service Guarantee, he had given an undertaking to this effect. Admittedly, the aforesaid amount was deducted from his post retiral dues. The grounds raised by the Applicant in the instant O.A. is that because he has taken premature retirement on the ground of his ill health, so the said ground entitles him for the refund of the deducted amount. After A B C D E F G H 876 SUPREME COURT REPORTS [2018] 1 S.C.R. perusal of the application of premature release, we are of the considered view that this ground is not tenable in view of the grounds taken by him in his own application. A plain reading of the aforesaid premature release application clearly shows that the main ground for his release was his dis-satisfaction due to delay in promotion and refusal to his posting to Pune, which were mentioned as the first five grounds. The sixth ground was taken as his ill health, wherein he has stated that I am unable to concentrate on my work due to my illness. I want to give off my best to the esteemed organisation which has given me so much and to conclude this application, he has written in paragraph 6, as under: “6. I was diagnosed with disabilities – primary hypertension & PIVD about ten months after coming to my present unit, which is in Counter Insurgency Operation – CI Ops. Recently I developed target organ involvement – hypertensive retinopathy – necessitating addition of another drug. Multiple factors as enumerated are having a deleterious effect on my health. I am unable to concentrate on my work due to my illness. I want to give off my best to this esteemed organization which has given me so much.” Contents of paragraph 7 of his own application show that the main ground for premature retirement were the other grounds.

#14. It makes it abundantly clear that the main ground for his premature retirement from the service was his supersession and his family issue. It is not the case where the applicant has prayed for his premature retirement mainly on the ground of his ill health.”

#4. When this appeal came up for preliminary hearing challenging the aforesaid judgment of the AFT, the Court found that the aforesaid approach of the AFT was without blemish and in consonance with law. The AFT has taken note of the fact that the Service Guarantee Certificate was submitted in terms of Army Instructions 13/78 as per which the appellant was liable to serve for nine years from the date of his return from study leave subject to certain exemptions like ill-health etc. However, in the present case, it is found, as a fact, that the main ground for seeking premature retirement was not the illness of the appellant. To this end, the order of the AFT does not call for any interference. A B C D E F G H WG CDR. ASHWINI KUMAR HANDA (RETD.) v. UNION OF INDIA & ORS. [A.K. SIKRI, J.] 877

#5. However, at that stage, the learned counsel for the appellant took an altogether different plea viz. even if the Service Guarantee Certificate was enforceable, the respondents were not entitled to deduct full pay and allowances drawn by the appellant during the period of his study leave inasmuch as the appellant had served for 6 years, 8 months and 19 days after return from study leave and only proportionate deduction was permissible in law. Accordingly, notice in this appeal was issued limited to the aforesaid question, namely, whether deduction should be proportionate to the service already rendered under the bond executed by the appellant. On this question of law, both the counsel have made their submissions.

#6. Learned counsel for the appellant submitted that the appellant has availed study leave for two years from December 27, 2003 to December 26, 2005 and thereafter he was in service posted initially to Command Hospital (SC) Pune till 2010 and thereafter to Command Hospital (NC) Udhampur, Jammu and Kashmir located in Counter Insurgency Operational Area. The appellant applied for premature retirement from service on completion of 22 years 9 months of total service on September 28, 2011 and he was released from service on September 15, 2012. The appellant after his study leave had served for 6 years 8 months and 19 days. He, thus, argued that as against commitment to serve for nine years on joining the duties after study leave, the appellant had served for substantial period of 6 years 8 months and 19 days and, therefore, there could not have been recovery of the entire amount of pay and allowances disbursed to him during study leave period. He argued that this action of the respondents in compelling the appellant to refund total amount thereby obliterating his long service after study leave is actually a case of unjust enrichment by the State and is contrary to the public policy. He also submitted that the respondents ought to have given due consideration to this aspect as model employer. Another submission of the learned counsel for the appellant was that, even otherwise, the aforesaid action on the part of the respondents is discriminatory and violative of Article 14 of the Constitution of India inasmuch as in other cases, the respondents have been making only proportionate recovery. In support, the appellant cited the case of one Surg Cdr Haresh Maini in whose case recovery of proportionate cost of training/study leave etc. was made under similar circumstances. For this purpose, the learned counsel relied upon information obtained from A B C D E F G H 878 SUPREME COURT REPORTS [2018] 1 S.C.R. A the respondents vide their communication dated February 6, 2014 under Right to Information Act, 2005. B C D E F G

#7. Learned counsel for the respondents stoutly refuted the aforesaid submissions. His contention was that the recovery was made in terms of bond/undertaking which was executed by the appellant in terms of Army Instructions 13/78 which instructions were admittedly applicable to all the three services, namely, Army, Navy and Air Force. He argued that the appellant herein had not challenged the aforesaid Army Rule either before the AFT or before this Court and, therefore, he could not argue to the contrary. In this behalf, he relied upon the judgment of this Court in the case of State of Punjab & Ors. v. Dr. Rajeev Sarwal1 wherein it is held that: “6. The contention put forth on behalf of the respondent that the period of study leave could be granted at a time not exceeding 24 months does not stand to reason at all because the rule is very clear that 24 months is relatable to the entire service and not to any part of service. The validity of the rule was not challenged before the High Court. Therefore, that aspect could not be gone into by the High Court. Nor could it be said that the exercise of power by the appellant was arbitrary, in any manner, merely because that power of relaxation was used in certain cases. In our opinion relaxation also cannot be read into a provision of this nature where the rule itself mandates the maximum period to be 24 months for the entire service. The order made by the High Court is, therefore, not sustainable.”

#8. He also relied upon two more judgments in support of his submission that clause of liquidated damages can be contractually incorporated, which would be enforceable in law. These are: (i) Oil & Natural Gas Corporation Ltd. v. Saw Pipes Ltd.2 “(1) Terms of the contract are required to be taken into consideration before arriving at the conclusion whether the party claiming damages is entitled to the same. (2) If the terms are clear and unambiguous stipulating the liquidated damages in case of the breach of the contract unless it is held that such estimate of damages/compensation is unreasonable or is by