Madhusudan Agarwal vs State Of U.P. & Others
2015 Latest Caselaw 13 ALL

HIGH COURT OF JUDICATURE AT ALLAHABAD
 
 

AFR
 
Judgment reserved on 07.04.2015
 
Judgment delivered on 18.04.2015
 

 
Case :- WRIT - A No. - 36019 of 2008
 

 
Petitioner :- Madhusudan Agarwal
 
Respondent :- State Of U.P. & Others
 
Counsel for Petitioner :- Anil Kumar Bajpai
 
Counsel for Respondent :- C.S.C.
 

 
Hon'ble Mahesh Chandra Tripathi,J.

Heard Shri Anil Kumar Bajpay, learned counsel for the petitioner and Shri Pankaj Rai, learned Addl. Chief Standing Counsel for the respondents.

By means of the present writ petition, the petitioner has prayed for following reliefs:-

"(i) to issue a writ, order or direction, in the nature of certiorari, quashing the impugned order dated 25.7.2007 passed by the Superintending Engineer, Bulandshahr Circle, Public Works Department, Bulandshahr ( Annexure-I to the writ petition).

(ii)to issue a writ, order or direction, in the nature of certiorari, quashing the information letter dated 20.03.2008 by which Rs.5,86,562/- has been deducted from the gratuity and encashment i.e. Rs.3,02,000/- from gratuity and Rs.2,36,562/- from encashment and has been paid vide Cheque No.510698 by the Executive Engineer, Provincial Division, Public Works Department, Bulandshahr (Annexure-IA to the writ petition).

(iii)to issue a writ, order or direction, in the nature of mandamus, directing the respondents to release the amount to the tune of Rs.5,86,562/- which was deducted from the gratuity and encashment as intimated to the petitioner vide letter dated 20.03.2008 along with interest @ 12%.

(iv)to issue a writ, order or direction, in the nature of mandamus, directing the respondents to also pay temporary imprest fro a sum of Rs.51,000/- and Rs.12,621/-.

(v) to award the cost of the petitioner to the petitioner."

Brief facts giving rise to the present writ petition are that the petitioner was initially appointed as Overseer in the year 1970. Later on the said designation was changed to Junior Engineer. The career of the petitioner was always unblemished and nothing adverse except the present incidence had been brought on record by the respondents. The petitioner has attained the age of superannuation on 31.7.2007. Shri Rajendra Prasad Sharma, who was then posted as Executive Engineer, Provincial Division, Public Works Department, Bulandshahar had issued an order on 2.12.2006 asking the petitioner to hand over the charge of store to Shri V.P. Singh-II, Junior Engineer with immediate effect.

Serious allegations have been levelled by the petitioner against Shri Rajendra Prasad Sharma, the details of which have been averred in para 6 of the writ petition. But at the time of argument the counsel for the petitioner has not pressed the relief against the Executive Engineer.

It has also been averred in the writ petition that Shri Rajendra Prasad Sharma was transferred on 19.12.2006 and at his place Shri S.R. Verma was posted as Executive Engineer since 19.12.2006 to 30.12.2006. Thereafter, in a very short span many Executive Engineers came on the said post, the details of which have been given in para 8 of the writ petition. Shri Rajendra Prasad Sharma had again taken over as Executive Engineer at Bulandshahar and passed a detailed order on 17.2.2007 appointing two Asstt. Engineers to assume the charge and by the same order authorisation of the petitioner to receive maxphalt (bitumen) from the Indian Oil Corporation, Mathura was cancelled on the ground that 2 and ½ months had elapsed and he failed to hand over the charge and, therefore, why not the disciplinary proceedings may be initiated against the petitioner. It has been contended that the petitioner on 20.2.2007 had handed over the charge to Shri V.P. Singh in pursuance to order dated 2.12.2006 along with all details of the store, but the reason best known to Shri V.P. Singh, he had not made any endorsement on the charge, the details of which have been averred in Annexure 4 to the writ petition.

For measurement of the stock position the Committee was constituted and as on 23.2.2007 the total stock of 291.883 metric tones were shown in the measurement book. The Chief Engineer, Public Works Department vide Office Memo dated 7th January, 1984 had issued circular by which it had been indicated that in case person has been transferred and is not handing over charge within the appointed day, then after expiry of three days the Executive Engineer shall appoint a committee of two Asstt. Engineers, who shall be of the same division but shall not be the Asstt. Engineer, who is holding the charge of such Junior Engineer. In the instant case the Asstt. Engineer-I was holding the charge of store in which the petitioner along with Shri V.P. Singh were posted.

Learned counsel for the petitioner submits that in utter disregard to the said office memo Shri Sharma has manoeuvred the things according to his own in order to get the result as per his own desire and to falsely implicate the petitioner. Learned counsel for the petitioner also submits that in the present matter on 17.3.2007 Shri V.P. Singh-II, Junior Engineer in whose favour assumption of charge was sought to be made had issued bitumen to Shri Anil Kumar twice and continued to release the stock material to the contractors of the department, which was not noticed by the Committee. In pursuance to the letter dated 15.3.2007 the Committee has submitted report on 17.2.2007 by which it had been indicated that 39.64 metric tones bitumen was found short. In this background Shri Sharma had issued a letter to the petitioner on 20th March, 2007 by which it had been indicated that as per the stock register the total bitumen of department's store should have been 331.323 metric tones, whereas after physical verification it was only 291.68 metric tones of bitumen, hence there is a shortfall of 39.64 metric tones and as such the petitioner was called for an explanation. Immediately in response to the said show cause notice the petitioner had responded that he had already given charge on 20.2.2007 along with stock position and as such no shortfall was found at the relevant time. Therefore, he was not liable for this shortfall. In this background on 7.6.2007 the petitioner was served with detailed show cause on the ground that the petitioner had not handed over the charge, therefore, the committee was constituted and after physical verification it was found that the bitumen to the tune of 39.64 metric tones worth Rs.8,49,928/- was found deficient. In has also been stated under the aforesaid facts that as to why suitable proceedings may not be initiated under CCS Rules against the petitioner. A detailed reply had been submitted by the petitioner on 20.6.2007 in which the allegations of malafide have been levelled against the then Executive Engineer and it is categorically stated that he had already handed over the charge on 20.2.2007. A deliberate attempt had been made by Shri Sharma so that at the fag end of his career, his entire service may be ruined and retiral benefits may be forfeited.

Learned counsel for the petitioner vehemently submits that the track record of the petitioner was unblemished. All the allegations were malafide against the petitioner and serious allegations were also levelled against Shri Sharma for illegal demand but the petitioner could not fulfil the same, therefore, he was falsely implicated. He has also submitted that in the present matter no enquiry had been initiated and in the absence of any regular enquiry the liability could not be fasten over the petitioner and as such the amount could not be realised from the gratuity as well as from the retiral benefits. He has also submitted that surprisingly initially the deficiency of 39.62 metric tones of bitumen was alleged but subsequently it had been reduced to 27.343 metric tone worth Rs.5,86,562/-.

Learned counsel for the petitioner has also apprised to the Court that on 4.6.2007 the bitumen measuring 39.62 metric tone was handed over to Shri V.P. Singh-II. The same has also been brought on record as Annexure No.17. In this regard the petitioner had also communicated to the Executive Engineer that once Shri V.P. Singh-II had already received the said bitumen on 4.6.2007, therefore, the show cause notice dated 25.7.2007 was liable to be quashed. He submits that the illegal deduction of the amount from the gratuity cannot be sustained. It is well settled law that the amount can only be recovered from the gratuity strictly in accordance with law and as such no procedure has been adopted by the department.

In support of his submissions, learned counsel for the petitioner has placed reliance on a judgment of this Court in Ghanshyam Das Varshney v. State of U.P. & Ors. {2015 (2) ADJ 673 (DB) (LB)} in which the Court held that in the matter of allegations of committing certain irregularities proper enquiry should be conducted. Without holding proper enquiry the punishment cannot be awarded to the employee. The petitioner has also placed reliance on a recent judgment of this Court in Bankey Bihari Chauhan v. State of U.P. & Ors. reported in 2015 (3) ADJ 305 (DB) in which a Division Bench of this Court held that adjustment of huge amount from gratuity is not permissible unless the employee is terminated in view of Section 4 (6) of the Payment of Gratuity Act, 1972. The Court has held that recovery from the gratuity can only be made after fulfilling the conditions as contained in Section 4 (6) of the Act. The Court has allowed the appeal and quashed the recovery order from gratuity. The recovered payment was ordered to be paid along with interest as per sub-section (3A) of Section 7 of the Act. The relevant portion of the judgment are quoted as under:-

"Section 4 (6) of the Act provides for the circumstances in which the gratuity of an employee, whose services have been terminated, can be forfeited. Section 4 (6) is in the following terms:

"4. Payment of gratuity. - (1) ... ...

(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 be 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."

In the decision of the Supreme Court in Jaswant Singh Gill Vs Bharat Coking Coal Limited4, it has been held that termination of services for any of the causes enumerated in sub-section (6) of Section 4 of the Act is imperative before the gratuity can be forfeited. The same principle has been followed in a more recent decision of the Supreme Court in State of Jharkhand Vs Jitendra Kumar Srivastava, 2013 (2) ESC 554 (SC).

In the present case, it is not in dispute that the services of the appellant were never terminated. The appellant continued to be in service and retired on attaining the age of superannuation. In the circumstances, the basic pre-condition for the forfeiture of gratuity under Section 4 (6) of the Act was not fulfilled. We may also note that Regulation 63 of the Regulations provides for penalties and clause (4) thereof provides for the recovery from pay or deposit at the credit of an employee of the whole or part of a pecuniary loss caused to the Corporation by negligence or breach of an order. The Regulations must necessarily be harmonized with the provisions of the Act and cannot override the express statutory provision. In any event, it is clear that even Regulation 63 contains no such provision of recovery from gratuity. In these circumstances, we are of the view that the action for recovery from gratuity was contrary to law and in the teeth of the express provision of the Act. The learned Single Judge, with great respect, was not justified in dismissing the petition on the ground that the appellant had not challenged the order of penalty or the appellate order. For the purposes of the present proceedings, it is not necessary for the Court to enquire into the grievance of the appellant that he was not served with the appellate order. Moreover, we may clarify that the learned counsel for the appellant has only confined himself to the payment of gratuity. Even if the order of penalty has attained finality, as is urged on behalf of the employer, any recovery or adjustment of the amount of gratuity has to be made by following the statutory provisions contained in the Act. Since the conditions set out in Section 4 (6) of the Act for forfeiture of the gratuity have not been fulfilled, the action of the employer was ultra vires."

Per contra learned Addl. Chief Standing Counsel submitted that the petitioner was incharge of the departmental godown and later on it was found that bitumen measuring 27.34 metric tone was deficient in the record and only after physical verification the loss of Rs.5,86,562/- was recovered from the petitioner. He has also submitted that vide order dated 12.12.2006 there was clear cut direction to the petitioner to hand over the charge to Shri V.P. Singh of the store-godown but the petitioner had not followed the direction issued by the superiors and as such he was responsible for the shortfall of the bitumen. He further submitted that in the present matter on account of this mess a committee of two Assistant Engineers was constituted on 17.2.2007 and in their presence the measurement had been made and as such 291.683 metric tone bitumen were verified in the godown. Even at the time of verification the petitioner was very much present and also made endorsement over the said verification. Therefore, at this belated stage a plea cannot be taken by the petitioner that such verification had not taken place in his presence. Thus, the writ petition is liable to be dismissed on the ground that admittedly the department had sufferred loss, which was liable to be recovered from the retiral benefits of the petitioner.

Heard rival submission and perused the record.

In the present matter the detailed show cause was given on 20.3.2007 by which it had been indicated that after verification it had been found that 39.64 metric tone of bitumen was fallen short in the godown. While issuing the impugned show cause notice the Executive Engineer observed that the matter was serious in nature. The petitioner was asked to submit his reply within three days' time otherwise the matter would be referred to the higher authorities for departmental enquiry. In response to the show cause the petitioner had responded immediately with details refuting the allegations and with categorical averment that at the time of handing over the charge there was no shortfall. Even Shri V.P. Singh, who has taken over the charge from the petitioner had also acknowledged the receiving of 39.62 metric tone of bitumen on 4.6.2007, which has also been brought on record as Annexure 17 to the writ petition. But it is surprised to note that merely on the basis of show cause notice and in the absence of any departmental enquiry how the department had reached to the conclusion that it had sufferred financial loss. Even the department had not shown any details regarding any full fledged enquiry in the matter or it had tried to ascertain the correct position from the godown. At one place the loss of 39.62 metric tone bitumen was found, whereas in the same letter the department came to the conclusion that only loss of 27.343 metric tone bitumen was occurred amounting to Rs.5,86,562/-. It is relevant to indicate that while passing the impugned order dated 25.7.2007 the Executive Engineer, Bulandshahar had observed as under:-

"vf/k'kklh vfHk;Urk izk0[k0] cqyUn'kgj us vius i=kad [email protected], ctV] fnukad 24-7-07 }kjk vf/k'kklh vfHk;Urk] fu0 [k0&2] cqyUn'kgj ds mijksDr i= o voj vfHk;Urk ds izR;kosnu dks lek;ksftr djrs gq, Jh e/kqlwnu voj vfHk;Urk ds fo:) 27-343 esS0Vu fcVqfeu dh deh] ftldh ykxr :0 586562-00 vkrh gS] dh 'kkldh; gkfu ds fy;s Jh e/kqlwnu voj vfHk;Urk dks nks"kh Bgjk;k gSA vr% Jh e/kqlwnu voj vfHk;Urk] izk0[k0] yks0fu0fo] cqyUn'kgj ls 'kkldh; gkfu :0586562-00 ek= dh olwyh fd;s tkus ds vkns'k ikfjr fd;s tkrs gaSA vf/k'kklh vfHk;Urk izk0[k0yks0fu0fo0] cqyUn'kgj ;g lqfuf'pr gks ysa fd izR;sd n'kk esa mDr /kujkf'k dh olwyh Jh e/kqlwnu voj vfHk;Urk ds osru] xzsP;qVh vkfn ns;ksa ds Hkqxrku ls iwoZ dj ysaA ;fn voj vfHk;Urk ds mDr ns;ksa ls okafNr /kujkf'k dh olwyh iwjh ugh gksrh gS rks okafNr /kujkf'k dh owlyh Jh e/kqlwnu voj vfHk;Urk dh py&vpy lEifRr ls fd;s tkus gsrq lEcaf/kr ftykf/kdkjh ds ek/;e ls dk;Zokgh gh tk;sA"

It is admitted case that in the present matter no departmental enquiry has taken place. Only on the basis of show cause the department had proceeded into the matter and took final decision and held that the petitioner was liable to pay Rs.5,86,562/-, which is against the principle of natural justice. While in service neither preliminary nor full fledged departmental enquiry has been made in the matter. No adverse material has been brought on record against the petitioner in his career.

The judgments cited by learned counsel for the petitioner fully support his case. It is not in dispute that services of the petitioner were never terminated. The petitioner continued to be in service and retired on attaining the age of superannuation. In the circumstances, the basic pre-condition for the forfeiture of gratuity under Section 4 (6) of the Gratuity Act, 1972 was also not fulfilled.

It has also been held time and again that the retiral benefits like pension, gratuity or leave encashment are not bounty or grace but are earned by the employee through the years of service of a company. They are an employee's security after retirement.

In Dr. Dudh Nath Pandey v. The State of Jharkhand & Ors., 2009 (2) SLJ 105 (Jharkhand), the Division Bench of Jharkhand High Court after scanning various case laws on the subject held that the conditions precedent for imposing penalty of withholding pension is that there should be a finding in departmental enquiry or judicial proceeding that the pensioner committed grave misconduct in the discharge of his duty while in office. The Court held that leave encashment also cannot be withheld since that is paid in lieu of unutilized leave as it partakes the character of salary.

In Dr. Dudh Nath Pandey v. The State of Jharkhand (2007 (2) BLJR 2847), the Full Bench of Jharkhand High Court has held that there is no power for the Government to withhold Gratuity and Pension during the pendency of the departmental proceeding or criminal proceeding. There is no power with the government to withhold Leave Encashment at any stage either prior to the proceeding or after conclusion of the proceeding.

In the matter of leave encashment the Full Bench of Punjab and Haryana High Court in Punjab State Civil Supplies Corporation Ltd. & Ors. v. Pyare Lal (Letters Patent Appeal No.113 of 2012) has held that the amount of leave encashment is payable to the retiring employee notwithstanding the pendency of the departmental enquiry or criminal proceedings.

In the present matter, leave the question of finding, even the proper enquiry was not conducted. Only on the basis of show cause the amount has been withheld from the encashment without giving any opportunity to the petitioner, which is against the principle of natural justice.

In view of the above, the order impugned dated 25.07.2007 cannot be sustained and is hereby set aside. The writ petition is allowed. The petitioner will be entitled for all the retiral benefits, which is due to him. The recovered amount shall be paid to the petitioner alongwith 9% interest calculated from the date, when it is payable till the date of its actual payment. The same shall be given to the petitioner within a period of three months from the date a certified copy of this order is produced before the authority concerned.

Order Date :-18.04.2015

SP/