SCA No. 769 of 2006 · Gujarat High Court

submitted by the learned advocate Ms. Sejal Mandavia on behalf of the petitioner that the petitioner is entitled to recover the amount of salary for a period of five years, six months and 27 days for which petitioner has worked unauthorizedly beyond the age of superannuation. Second contention raised by Ms.Mandavia is to the effect that the workman was compulsorily retired from service, therefore, not entitled to claim and receive the amount of gratuity. Third contention raised by her is to the effect that since the departmental inquiry as well as criminal prosecution both are pending against the workman, therefore, corporation is having right SCA/769/2006 JUDGMENT to withheld the amount of gratuity. In view of these submissions, Ms. Mandavia submitted that the controlling authority as well as the appellate authority both have committed serious error which would require interference of this Court in exercise of Article 227 of the Constitution of India. I have considered the submissions made by Ms. Mandavia on behalf of the petitioner. I have also perused the orders passed by appellate authority as well as the controlling authority. I have also considered the reasons given by the authorities. It is not in dispute that the respondent was appointed by the corporation on

13.5.1964 and he was made to retire by order dated 27th February, 2004. As regards allegations made against workman, undisputedly, no departmental inquiry into the said allegations was initiated by the corporation against respondent and no order of punishment has been SCA/769/2006 JUDGMENT passed against workman. Admittedly, departmental inquiry as well as the criminal prosecution in the same allegation both are pending and no decision has yet been given in either of the case against workman. From the bare perusal of the order of retirement dated 27.2.2004, it appears that the petitioner was retired as per that order and that cannot be considered as an order of compulsory retirement as contended by Ms. Mandavia on behalf of petitioner. In such circumstances, whether the petitioner is entitled to withheld the amount of gratuity on the ground of allegation or not or on the ground of pendency of criminal prosecution/departmental proceedings.

This question has been examined by the Division Bench of this Court in case of GSRTC versus Devendrabhai Mulvantrai Vaidya reported in 2006 (1) LLJ 324. Similar factual aspect is involved in both the cases and important thing is that the petitioner GSRTC is the appellant in the SCA/769/2006 JUDGMENT said decision (GSRTC V/s. Devendrabhai Mulvantrai Vaidya) and there was similar challenge like this petition. In view of that, whether the petitioner can re-agitate the same question which has already been decided and that too in case wherein petitioner was appellant. Division Bench of this Court delivered decision in case of GSRTC v/s. DM Vaidya (Supra) in Letters Patent Appeal No. 649 of 2004 on May 5, 2005. Decision of the Controlling authority is dated 6th December, 2004 and the appellate authority decided the matter on 6th September, 2005 and the present petition is filed on 21st November, 2005.

Affidavit is filed by one Kanaiyalal Bhikhabhai, A.A.O., Central Workshop, Naroda. Why this fact is required to be mentioned ? It is mentioned to indicate how the legal department is functioning in the ST Corporation. In reported decision, GSRTC has challenged the order on the same ground which has been decided by the Division Bench of this Court on 5th May, 2005. When the Division Bench SCA/769/2006 JUDGMENT has already decided such question, then why challenge again on the same ground was allowed to file petition by the legal adviser and why the legal adviser has not given any opinion and why wasting of time, energy and amount of public exchequer by filing petition before th is Court and due to that, amount of gratuity has been unnecessarily withheld for a further period without any justification. Therefore, before deciding this issue, petitioner corporation means Managing Director is directed to examine this issue as to whose legal advise has resulted into filing of this petition?

In GSRTC v/s. Devendrabhai M. Vaidya (Supra), Division Bench of this Court has considered the scope of section 4(6) of the Payment of Gratuity Act, 1972 and it was held that the pendency of criminal case or department inquiry would not entitle employer to forfeit gratuity of employee. Paragraph 2 and 3 of the SCA/769/2006 JUDGMENT said decision are reproduced as under: “2. The appellant being aggrieved by the judgment and order dated 15.7.2003 passed by the learned Single Judge in Special Civil Application No. 8990 of 2003 is before this Court with a plea that as the criminal proceedings are pending consideration against the respondent workman, he would not be entitled to gratuity. It is further submitted that though the employee was allowed to retire from the services, but the departmental proceedings are going on and as such no order for payment for gratuity could be made in favour of the respondent workman in view of Section 4(6) of the Act.

Placing reliance upon a judgment of the Supreme Court in the matter of Calcutta Insurance Ltd., v. The Workmen, reported in AIR 1967 SC 1286, it was submitted that the gratuity would be a reward a for good, efficient and faithful service rendered considerable period and there will be no justification for awarding the same when an employee has committed a misconduct.

Sub-section (6) of Section 4 of the Payment of Gratuity Act, 1972 says that the gratuity of an employee shall be forfeited to the extent of damage or loss so caused if the services of such employee has been terminated for any act, wilful omission or negligence causing any damage or loss to or destruction of, property belonging to the employer. For application of this clause, the first submission should be that the services of the employee has been terminated for any act, wilful omission or negligence causing any damage or loss to or destruction of, property belonging to the employer. In the present case, the appellant does not say that for any such misconduct as provided in clause (a) of sub-Section (6), the services have been terminated. So far as clause (b) of Sub-section (6) is concerned, it provides that the gratuity payable to an employee may be wholly or partially forfeited if the services of such employee have been terminated for his riotous or disorderly conduct or any other act of violence on his part or if the services of such employee have been terminated for any act which constitutes an offence involving moral turpitude, provided that such offence is committed by him in the course of his employment.

In appeal also, same contention was raised by Corporation in addition to one fact that during the pendency of this appeal, the Corporation has passed the punishment order dated 14th July,2005, wherein, the Corporation is required to recover the amount from respondent of Rs.2,65,586.54 paise. Except that, no additional contention was raised by the Corporation before the appellate authority. The appellate authority has also considered the contention that respondent is not an employee within a meaning of Section 2(e) of the Payment of Gratuity Act,1972. The appellate authority has considered the amendment of 1984 and 1994 and come to conclusion that respondent is an employee covered within the definition of Section 2(e) of the Payment of Gratuity Act,1972. In respect to power of the employer to withhold the gratuity under Section 4 sub- section 6, the appellate authority has come to conclusion that there is no termination order passed by employer and before retirement, punishment order is also not passed and workmen has retired on 30th SCA/769/2006 JUDGMENT April,2004. Therefore, circumstances, there is no provision under the Payment of Gratuity Act,1972 which gives right to employer to withhold the amount of gratuity. Against the punishment order, appeal is filed by the workman before the appellate authority which is pending and, therefore, the appellate authority come to conclusion that once the Corporation has given clearance certificate at the time of retirement by all the departments including Account Department, Traffic Department, Security Department and Stores Department and that no amount has remained due against the Corporation of the employee, therefore, the appellate authority has come to conclusion that under Section 7, workman is entitled the amount of gratuity within a period of one month from the date of retirement, which is not paid and withheld by Corporation without any authority of law and Section 4 Sub-Section 6 is not applicable to the facts of this case.

I have considered the submissions made by learned Advocate, Mr.Meena as well as the observations made by both the lower authorities. In respect to the contention that respondent is not covered by definition of “employee” under Section 2(e) of the Payment of Gratuity Act,1972, the view taken SCA/769/2006 JUDGMENT by this Court in case of Lalit D.Thakkar (Supra), this Court has observed that Works Manager and Managerial function is squarely covered within the definition of an employee as given in Section 2(e) of the Act. Therefore, that contention is rejected by this Court relied upon by the authority as well as considering the two amendments made in Payment of Gratuity Act in the year 1984 and 1994. The second contention about applicability of provisions of Section 4 Sub-Section 6, which is quoted as under :

Sub-Section-6 Notwithstanding anything contained in sub- section (1)- (a) the gratuity of an employee, whose services have been terminated for any act, willful omission or negligence causing any damage or loss to, or destruction of, property belonging to the employer, shall be forfeited to the extent of the damage or loss so caused; (b) the gratuity payable to an employee [may by wholly or partially forfeited]- (i) if the services of such employee have been terminated for his riotous or disorderly conduct or any other act of violence on his part, or (ii) if the services of such employee have been terminated for any act which constitutes an offence involving moral turpitude, provided that such offence is committed by him in the course of his employment.

SCA/769/2006 JUDGMENT

7.1 This Sub-Section gives power to the employer and authorized to withhold the amount of gratuity when service has been terminated for any act, willful omission or negligence causing any damage or loss to, or destruction of property, belonging to employer. But, in this case there is no similar facts. Here petitioner Corporation has not terminated the service of workman and no decision of termination has been taken by the Corporation. On the contrary, workman retired from service as permitted by Corporation on 30th April,2004. The Corporation has issued no due certificate from each Department of Corporation. Therefore, considering the provision of this Section, corporation is not authorized to forfeit or withhold the amount of gratuity till the departmental inquiry is over against the workman. Against the punishment order dated 14th July,2005 the respondent workman has filed departmental appeal which is pending before the appellate authority. Therefore, according to my opinion, the controlling authority as well as appellate authority have rightly come to conclusion that because of the pendency of departmental inquiry, amount of gratuity cannot be withheld by employer. Similar view has been taken by this Court in case when criminal prosecution is pending or departmental SCA/769/2006 JUDGMENT inquiry is pending, which would not entitle the employer to forfeit the gratuity of the employee. In case of GSRTC Vs. Devendra Mulvantri Vaidya reported in 2006 I LLJ 324, the Division Bench of this Court in para.3 has observed as under :

3. Sub-section (6) of Section 4 of the Payment of Gratuity Act, 1972 says that the gratuity of an employee shall be forfeited to the extent of damage or loss so caused if the services of such employee has been terminated for any act, wilful omission or negligence causing any damage or loss to or destruction of, property belonging to the employer. For application of this clause, the first submission should be that the services of the employee has been terminated for any act, wilful omission or negligence causing any damage or loss to or destruction of, property belonging to the employer. In the present case, the appellant does not say that for any such misconduct as provided in clause (a) of sub-Section(6), the services have been terminated. So far as clause (b) of Sub-section (6) is concerned, it provides that the gratuity payable to an employee may be wholly or partially forfeited if the services of such employee have been terminated for his riotous or disorderly conduct or any other act of SCA/769/2006 JUDGMENT violence on his part or if the services of such employee have been terminated for any act which constitutes an offence involving moral turpitude, provided that such offence is committed by him in the course of his employment.

It is not the case of the appellant that the employee has been terminated for his riotous or disorderly conduct or any other act of violence or he has been terminated for an act which constitutes an offence involving moral turpitude. If the employee/workman was allowed to retire after completing about 38 years on reaching the age of superannuation, then the provisions contained in sub-section (6) of Section 4 would not apply. Before the learned Single Judge, the fact was not disputed that the respondent workman was allowed to retire. Pendency of the criminal case or the departmental enquiry would not entitle the appellant Establishment to forfeit the gratuity either wholly or in part if the employee has not been terminated under the provisions of sub-section (6) of Section 4 of the Act. So far as the judgment of the Supreme Court in the matter of Calcutta Insurance Ltd. (supra) is concerned, we must immediately observe that the reliance placed on the judgment is misconceived.

In the said matter, SCA/769/2006 JUDGMENT considering the case where an employee voluntarily resigned and brought about termination of his service the Apex Court made such observations. Present is not a case of that nature. In the present matter, the employee was allowed to retire on completion of 38 years on attaining superannuation. The submissions made by the appellant are misconceived. They deserve to and are accordingly rejected. The appeal is dismissed. Consequently, Civil Application for stay is also dismissed.”

In the said decision, both the contingencies have been taken into account by Division Bench; one is pendency of criminal case or departmental inquiry. Therefore, question which has been raised by learned Advocate, Mr.Meena, is answered by the Division Bench of this Court. Therefore, the reliance which has been placed by learned Advocate, Mr.Meena, in one identical petition being SCA No.1322 of 2005 which has admitted by this Court on 3rd February,2005 and ad-interim relief granted is confirmed by this Court on 20th January,2006. Copy of that interim order is placed on record. The contention of learned Advocate, Mr.Meena, is not accepted by this Court only on the ground that when Rule was issued in SCA SCA/769/2006 JUDGMENT No.1322 of 2005 on 3rd February,2005, but decision given by Division Bench on 5th May,2005 i.e. subsequent to admitting the matter by this Court. Merely rule has been issued is not enough, but here Division Bench has already examined the matter on the same issue and decided in the case of Corporation itself.