THE HON'BLE SMT. JUSTICE P.MADHAVI DEVI
WRIT PETITION No.994 of 2023
ORDER:
This Writ Petition is filed seeking a writ of mandamus declaring the impugned order dated 15.12.2022 as illegal and arbitrary and consequently to direct the respondents to pay the amount of leave encashment of the unavailed privilege leave of 240 days that was to the credit of the petitioner as on the date of his compulsory retirement, together with interest @ 10% per annum from the date of compulsory retirement i.e., on 15.03.2014 and also to pay the amount of Rs.8,03,000/- which has been withheld by the respondents from the total amount of gratuity payable as per the Gratuity Act with interest at the rate of 10% from the date of such illegal withholding and to pass such other order or orders.
2. Brief facts leading to the filing of the present writ petition are that on certain allegations of financial irregularities committed by the petitioner, the petitioner was imposed with the punishment of compulsory retirement vide orders dated 15.03.2014 and as the petitioner did not challenge the said order, it has become final. It is submitted that the petitioner, thereafter, has made a request for 2 PMD,J W.P.No.994 OF 2023 encashment of his earned leave and also for payment of gratuity to him. When the same was not considered by the respondents, the petitioner filed W.P.No.25920 of 2022 and this Court, vide order dated 29.12.2022, directed the respondents to consider the representation of the petitioner and to pass appropriate orders thereon within a time frame. The respondents have thereafter issued a show cause notice dated 29.11.2022 and passed the impugned order dated 15.12.2022 rejecting the request of the petitioner for encashment of leave and also for payment of the entire gratuity and for not withholding a sum of Rs.8,03,000/-. Challenging the same, the present Writ Petition is filed.
3. Learned counsel for the petitioner submitted that the respondents have not complied with the directions of this Court dated 29.12.2022 in W.P.No.25920 of 2022 in its true letter and spirit and have issued a show cause notice, without giving details as to how the petitioner is not eligible for encashment of earned leave in view of the penalty of compulsory retirement imposed on him, and also as to how the loss of Rs.8,00,109/- has been incurred by the bank on account of the alleged financial irregularities committed by the petitioner. The learned counsel for the petitioner further submitted that the petitioner has given a detailed explanation to the respondents with regard to each of the issues raised in 3 PMD,J W.P.No.994 OF 2023 the show cause notice dated 29.11.2022 but the respondents without referring to any of them have summarily rejected the request of the petitioner. Learned counsel for the petitioner submitted that the order of compulsory retirement did not refer to any forfeiture of the encashment of privilege leave and that the said issue is also covered by the judgment of the Division Bench of this court in W.A.No.502 of 2016 dated 12.08.2016 in respect of the amount withheld from the gratuity payable to the petitioner. Since the respondents have not followed the principles of natural justice and have not given particulars as to how financial loss has been arrived at, the respondents could not have withheld the same.
4. Dr. K. Lakshmi Narasimha, learned Standing Counsel however relied upon the averments made in the counter affidavit and submitted that the petitioner is not eligible for leave encashment and also the gratuity which has been withheld. He submitted that the authorities have brought out as to how the bank has incurred the loss of Rs.8,00,109/- and therefore the gratuity and leave encashment have been rightly withheld.
5. Having regard to the rival contentions and the material on record, this Court finds that on the issue of entitlement of encashment of earned leave by an employee who has been compulsorily retired from the service, 4 PMD,J W.P.No.994 OF 2023 the Division Bench of this Court has already considered the same in W.A.No.502 of 2016 dated 12.08.2016 in respect of the service regulations of the very same bank i.e., Andhra Bank in the case of Andhra Bank v. Y.Shivaji, and has held as under:
"12. It is trite that an employee earns Privilege Leave while in service. When the Service Regulation provided for encashment of Privilege Leave, a right in respect thereto comes to be vested in an employee. Unless the Regulations governing the service conditions of the employee either expressly or by necessary implication takes away such vested right, he cannot be denied such right. While the service regulations per se do not expressly deny this right to an employee who suffered punishment of compulsory retirement, the plain language of the Regulations discussed above also does not lead this Court to the conclusion that even by implication the employee is denied of this right.
17. Moreover, as rightly observed by the learned single Judge, the disciplinary authority has not forfeited the right of the respondent to encash the Privilege Leave. Thus, neither under the Regulations nor under the order of the disciplinary authority, the respondent is deprived of his right to encash the Privilege Leave.
18. Before concluding, here in an icing on the cake! Almost at the fag end of the hearing, learned counsel for the respondent placed before us letter dt.11.05.2015 of the Deputy Chief Executive of the Indian Banks' Association wherein it was stated that based on various representations received from the banks, the decisions of the Courts, that of the Government of India, and the HR Committee, the Managing Committee at its meeting held on 30.04.2015 accepted the recommendations of the HR Committee and decided to permit encashment of Privilege Leave by the compulsorily retired employees/officers. This decision of the Indian Banks' Association was 5 PMD,J W.P.No.994 OF 2023 approved by the Board of appellant No.1 bank in its Fourth Meeting held on 8.7.2015 at Hyderabad. When this material was placed before us, we have called upon appellant No.2 to explain their conduct in contesting the appeal, and he has sought to justify the same based on an earlier Circular dt.27.11.2000 as per which the compulsorily retired employees were held not entitled for leave encashment and that when the punishment of compulsory retirement was imposed on the respondent the said Circular was in force. Though in strict sensu the benefit of the Board's Resolution dt.8.7.2015 cannot be made applicable to the respondent, what is pertinent is that Indian Banks' Association has yielded to the preponderance of the judicial opinion on the interpretation of Regulation 38 of the Service Regulations and veered round to the reality that the Regulations do not deny a compulsory retired employee of his right to encash the Privilege Leave. Thus, our view derives strength from the aforementioned decision of the Indian Banks' Association and also the Resolution of the Board of Directors of appellant No.1."
In view of the same, the request of the petitioner for encashment of earned leave is allowed.
6. As regards the withholding of Rs.8,00,109/-, this Court finds that this issue is also covered by the decision of the Hon'ble Supreme Court in the case of Jyotirmay Ray v. Field General Manager, Punjab National Bank 1 wherein the Hon'ble Supreme Court was considering the case of forfeiture of gratuity under the Payment of Gratuity Act and have upheld the judgment of the full bench of the Punjab and Haryana 1 2023 SCC OnLine SC 1452 6 PMD,J W.P.No.994 OF 2023 High Court in UCO Bank under similar circumstances. In the said case also, the financial loss which is sought to be recovered from the gratuity was not quantified and therefore the Court has held that when the quantification of loss is not proved, the same is not recoverable. In the present case, since there is no quantification of financial loss to the bank at any stage of the departmental proceedings, the same could not have been withheld by the respondent. Therefore, on the said ground also, the Writ Petition is allowed and the respondents are directed to make payment of encashment of earned leave and also the amount which has been withheld from gratuity with interest at the rate of 6% per annum from the date of retirement of the petitioner to the date of payment.
6. Accordingly, this Writ Petition is allowed. There shall be no order as to costs.
Miscellaneous applications, if any pending, shall also stand closed.
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JUSTICE P.MADHAVI DEVI
Date: 18.11.2023
PRN
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W.P.No.994 OF 2023
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THE HON'BLE SMT. JUSTICE P. MADHAVI DEVI
WRIT PETITION No.994 of 2023
Date: 18.11.2023
PRN