* IN THE HIGH COURT OF DELHI AT NEW DELHI
Date of decision: 21st December, 2011.
+ LPA 792/2011
% NATIONAL FERTILIZERS LTD. ....Appellant
Through: Mr. A.S. Chandhiok, ASG with Mr.
P.K., Advocate.
Versus
A.K. MAITRA ..... Respondent
Through: Ms. Anju Bhattacharya, Adv.
AND
LPA 793/2011
NATIONAL FERTILIZERS LTD. ....Appellant
Through: Mr. A.S. Chandhiok, ASG with Mr.
P.K., Advocate.
Versus
ANIL KUMAR SHARMA ..... Respondent
Through: Ms. Anju Bhattacharya, Adv.
CORAM :-
HON'BLE THE ACTING CHIEF JUSTICE
HON'BLE MR. JUSTICE RAJIV SAHAI ENDLAW
RAJIV SAHAI ENDLAW, J.
1. The appeals impugn identical orders in W.P.(C) No. 8561/2010 & W.P.(C) No. 469/2011 preferred by the respondents and whereby the learned Single Judge has directed the appellant to release the amount due to each of the respondents towards Leave Encashment along with interest @ 8% per LPA Nos.792-93/2011 Page 1 of 12 annum. The respondents superannuated from the employment with the appellant on 28th February, 2009 and 31st March, 2010 respectively. However their retiral dues on account of Gratuity and Leave Encashment were not released to them. The respondents approached the Controlling Authority under the Payment of Gratuity Act, 1972; the appellant in those proceedings took a stand that the gratuity amounts had been withheld due to pendency of judicial proceedings against the appellant and some of its officials including the respondents, for payment of advance monies to M/s Karsan Ltd., Ankara, Turkey for supply of urea without obtaining the approval of Reserve Bank of India. However, the Controlling Authority under the Gratuity Act held that since disciplinary proceedings also initiated against the respondents for the same reason were dropped on 13 th October, 2004 and 18th February, 2005 respectively and the respondents exonerated and further since as on the date of superannuation, no disciplinary proceedings were pending against the respondents, the appellant was not entitled to withhold the gratuity. Accordingly, the Controlling Authority under the Gratuity Act directed the appellant to release the gratuity amounts LPA Nos.792-93/2011 Page 2 of 12 to the respondents. The appeals preferred by the appellant before the Appellate Authority under the Gratuity Act were unsuccessful and the gratuity amounts released by the appellant to the respondents.
2. However, the appellant having still not released the amount towards Leave Encashment, the writ petitions from orders wherein these appeals have preferred, were filed by the respondents for a direction to the appellant to release the amount towards Leave Encashment.
3. The appellant contested the said writ petitions contending that the amounts towards Leave Encashment were withheld in accordance with the decision of the Board of Directors and which decision was in accordance with the Rules and Regulations of the appellant. It was pleaded that pursuant to authorization of Government of India to import urea, the appellant entered into a contract with M/s Karsan Ltd. aforesaid for supply of urea fertilizer in bagged form; the contract provided for 100% advance payment and an amount US $ 38 million was so paid; however neither was the urea received nor the advance refunded; that the respondents amongst other employees of the appellant had vetted the contract; that the LPA Nos.792-93/2011 Page 3 of 12 Enforcement Directorate, Foreign Exchange Regulation Act, 1973 (FERA) initiated proceedings against the appellant and some of its employees including the respondents alleging that the clauses of the contract were in violation of FERA and Exchange Control Manual; that the said proceedings i.e. adjudication proceedings under Section 50 of FERA and criminal complaint under Section 56, FERA r/w Section 200 Cr.P.C. were still pending. It was thus contended that since there was a possibility of imposition of penalty under Section 50 of FERA on the respondents, the amount due to the respondents towards Leave Encashment was being withheld till culmination of those proceedings.
4. The learned Single Judge has allowed the writ petitions filed by the respondents holding that the said dues could be withheld only during the pendency of disciplinary proceedings for imposition of major penalty and the respondents having been exonerated in the said proceedings the appellant is no longer entitled to withhold the same. It was further held that retiral benefits including of Leave Encashment are not bounty but are earned by the employees through the years of service and cannot be withheld. The learned LPA Nos.792-93/2011 Page 4 of 12 Single Judge has also held that the pendency of the criminal proceedings against the respondents does not entitle the appellant to withhold the dues since the appellant as well as some other employees of the appellant are also accused therein.
5. The sole question for adjudication is thus whether the appellant is entitled to withhold the said dues during the pendency of the aforesaid prosecution and adjudication proceedings.
6. The learned ASG appearing for the appellant relies on Rule 50 of the National Fertilizers Limited Employees' (Conduct, Discipline and Appeal) Rules which is as under:-
"Wherever NFL Employees (CDA) rules are silent, the provision of Govt. CCS (CCA) Rules shall be followed."
7. It is further contended that since the Rules aforesaid are silent with respect to withholding of Leave Encashment, Rule 39(3) of the Govt. CCS(Leave) Rules, 1972 which is as under would apply:- LPA Nos.792-93/2011 Page 5 of 12
"39(3) The authority competent to grant leave may withhold whole or part of cash equivalent of earned leave in the case of a Government servant who retires from service on attaining the age of retirement while under suspension or while disciplinary or criminal proceedings are pending against him, if in the view of such authority there is a possibility of some money becoming recoverable from him on conclusion of the proceedings against him. On conclusion of the proceedings, he will become eligible to the amount so withheld after adjustment of Government dues if any."
8. Reliance is also placed on a communication dated 18th January, 2011 of the Ministry of Finance, Department of Revenue enclosing clarification issued by DoPT on Rule 39(3) (supra) to the effect that withholding of Leave Encashment should be resorted to in those cases where there is likelihood of some money becoming due for instance where the proceedings are on account of embezzlement of government funds or loss of public money etc. It is contended that Section 50 of FERA provides for imposition of penalty not exceeding five times the amount or value involved in any such contravention. It is argued that if contravention is proved, the appellant company may be subjected to payment of huge penalty as the value of the contract was `133 crores.
LPA Nos.792-93/2011 Page 6 of 12
9. The counsel for the respondents though has disputed the existence of Rule 50 (supra) in the Rules, has also contended that the same even if in existence would not make the provisions of Rule 39(3) (supra) applicable. The learned Single Judge also in this regard has noticed the Resolution dated 16th August, 1996 of the Board of Directors of appellant as under:-
"RESOLVED THAT the proposal for withholding the payment on account of leave salary/leave encashment due to an employee against whom disciplinary proceedings for imposing major penalty are contemplated and/or pending on the charge of having caused loss/damage to the Company and from whom some amount will become recoverable if charges are proved, be and is hereby approved for incorporation in rules of the Company."
The counsel for respondents has contended that the Resolution aforesaid restricts the withholding of Leave Encashment only to the cases where disciplinary proceedings for imposing major penalty are contemplated or pending and in which there is possibility of amounts being recoverable for having caused loss/damage to appellant. It is contended that the departmental proceedings against the respondents stood concluded long before their superannuation and the respondents were exonerated and thus LPA Nos.792-93/2011 Page 7 of 12 there is no possibility of anything being recoverable by appellant from respondents.
10. We have considered the matter. Rule 50 (supra) provides for applicability of the CCS (CCA) Rules where the appellant's Rules are silent. However owing to the Resolution dated 16 th August, 1996, it cannot be said that the Rules of the appellant are silent regarding withholding of Leave Encashment. Rule 50 (supra) uses the expression "wherever NFL Employees (CDA) Rules are silent" which would mean a case of "no provision" and not a case of "insufficient provision". However, in view of the Resolution (supra), as far as the employees of the appellant are concerned, it cannot be said that there is no provision for withholding of Leave Encashment. The Resolution (supra) enables appellant to withhold Leave Encashment due to an employee against whom disciplinary proceedings for imposing major penalty are contemplated or pending, for the charge of having caused loss or damage to the company and from whom some amount will be recoverable if charges are proved. Such is not the case here. At the time of retirement of the respondents, neither any disciplinary LPA Nos.792-93/2011 Page 8 of 12 proceedings were pending nor contemplated. Rather, disciplinary proceedings earlier initiated had been dropped and the respondents exonerated. The Leave Encashment of the respondents is now sought to be withheld under Rule 39(3) of the Government CCS (Leave) Rules (supra) which provides for such withholding not only in the case of disciplinary proceedings, as provided in the Resolution (supra) also, but also in case of criminal proceedings and if there is a possibility of any government dues against the employees. The question which arises is, whether when the Board of Directors of the appellant did not choose to extend withholding of Leave Encashment to cases of prosecution and government dues as provided for in Rule 39(3) (supra), can such withholding be permitted by relying on residuary Rule 50 (supra). In our opinion, no. The Supreme Court in B.S. Mathur Vs. UOI (2008) 10 SCC 271 similarly held that where a particular aspect is provided for in the Rules, the Rules cannot be said to be silent with respect thereto and the question of taking any aid from any outside Rule does not arise.
LPA Nos.792-93/2011 Page 9 of 12
11. Though the aforesaid is sufficient to dismiss these appeals but we deem it appropriate to consider the position under Rule 39 (3) supra also.
12. A Division Bench of this Court of which one of us (Acting Chief Justice) was a member, in judgment dated 11th September, 2002 in CWP 3545/2002 titled LAC R. Bhaskaran Vs. UOI held that once a provision is made for payment of certain amount by way of leave encashment, it becomes akin to a right of property in terms of Article 300A of the Constitution of India and such a right can neither be taken away nor curtailed as was sought to be done in that case by a mere circular. Relying on the said judgment, another Division Bench of this Court in judgment dated 1st December, 2010 in W.P.(C) No. 4011/2010 titled Kanwar Pal Singh Vs. UOI, in the absence of any Rule denying leave encashment in the case of dismissal from service, directed payment of leave encashment benefit.
13. The CCS (CCA) Rules are concerned with relationship between the government as the employer and its servant/employee. The same are not intended to provide otherwise. Thus what has to be recoverable within the LPA Nos.792-93/2011 Page 10 of 12 meaning of Rule 39(3) of the CCS (Leave) Rules supra has to be the loss occasioned by the employee to the employer. The said rule cannot be made applicable for recovery of other dues. The amount if any due under Section 50 of FERA cannot be said to be recoverable on account of relationship of employer or employee but is by way of penalty for contravention of provisions of FERA. Rather, Sections 57 & 70 of FERA also provide for mode of recovery of such penalty amounts. There is no provision for attachment in anticipation of penalty being levied. If it were to be accepted that Rule 39(3) supra can be invoked in the case of any government dues, then the government as employer would be entitled to withhold Leave Encashment in the event of pendency of any prosecution even if unrelatable to the employment, which the employee at the time of superannuation may be facing and which may also be punishable with fine or for that matter, any other government dues viz. electricity / water charges etc. even. The same cannot be the purport of the Rule 39(3) aforesaid.
14. We are also constrained to observe that had the appellant been of the view that there was any likelihood of any monies becoming due from the LPA Nos.792-93/2011 Page 11 of 12 respondents to the appellant, considering the complaint of the Enforcement Directorate, FERA, the appellant ought not to have dropped the departmental proceedings initiated against the respondents and exonerated the respondents. The appellant having done so is not entitled to contend otherwise.
15. We therefore, though for reasons different from those which prevailed with the learned Single Judge, do not find any merit in the appeals. The same are dismissed.
RAJIV SAHAI ENDLAW, J ACTING CHIEF JUSTICE DECEMBER 21, 2011 pp LPA Nos.792-93/2011 Page 12 of 12