A.K. Maitra vs Chairman & Managing Director, ...
2011 Latest Caselaw 3253 Del

      IN THE HIGH COURT OF DELHI AT NEW DELHI

                  Judgment delivered on: 11.07.2011


                           W.P.(C) No.8561/2010


A.K.Maitra                                ......Petitioner
                  Through: Ms.Anju Bhattacharya, Advocate.

                               Vs.

Chairman & Managing Director,
National Fertilizers Limited                  ......Respondent

                  Through: Mr.G.Joshi, Advocate.


CORAM:
HON'BLE MR. JUSTICE KAILASH GAMBHIR

1. Whether the Reporters of local papers may
    be allowed to see the judgment?
2. To be referred to Reporter or not?


3. Whether the judgment should be reported
     in the Digest?


KAILASH GAMBHIR, J.Oral:
*

1. By this petition filed under Article 226/227 of the

Constitution of India, the petitioner seeks to direct the respondent

to release the amount of his leave encashment alongwith interest @

12% per annum.

2. Brief facts of the case relevant for deciding the present

petition are that the respondent no.1 is a Government of India

Undertaking under the administrative control of Ministry of

Chemical and Fertilizer, Department of Fertilizers and that the

petitioner joined the respondent as its Company Secretary on

1.07.1994 where he was promoted to the position of Chief Manager

on 1.07.1999. He was further promoted in the scale of Deputy

General Manager on 27.06.2005 and then in the scale of General

Manager w.e.f. 1.09.2006. The petitioner was redesignated as

Company Secretary and General Manager(Law) w.e.f. 1.01.2007

which post he held till the date of his retirement on 28.02.2009.

That on his retirement, the petitioner was entitled to receive his

retiral dues on account of gratuity and leave encashment which was

not released by the respondent as certain departmental

proceedings were held against the petitioner on account of

irregularities in the import of Urea deal with M/s Karsan Ltd.,

Ankara, Turkey. However, on the basis of oral and documentary

evidence adduced and on examination of the findings of the Inquiry

Officer, the Disciplinary Authority ordered the dropping of all

charges alleged against him and the petitioner was fully exonerated

vide order dated 13.10.2004. That the Enforcement Directorate

filed a complaint against N.F.L. and some of its officials including

the petitioner alleging FERA violations in respect of the aforesaid

contract of import of Urea entered between NFL and a Turkish

company which are still pending. That the petitioner approached

the Controlling Authority under the Payment of Gratuity Act for his

gratuity amount and the said Controlling Authority vide order dated

11.5.2010 directed the respondent to pay the gratuity amounting to

Rs. 6,86,243 alongwith interest @8% p.a. , to which an appeal was

filed by the respondent and which vide order dated 2.11.2010 was

dismissed. With respect to the leave encashment payable to the

petitioner, the stand that judicial proceedings are pending against

the respondent company and some of its officials, has been taken by

the respondent due to which it claims that it has withheld the said

payment. The grievance raised by the petitioner is that he is made

party only by the legal fiction under clause 68 of FERA merely

because at the time the contract was executed he was one of the

Principal Officers of the Company, namely Company Secretary and

not due to any misconduct committed by him individually. However,

the respondent claims that it has withheld the leave encashment

amount of the petitioner, as the culmination of these proceedings

may lead to imposition of penalty and fine and further in view of the

fact that a Company being an artificial juristic person, has a right to

recover the said penalty and fine from its accused employees.

3. Ms. Anju Bhattacharya, learned counsel for the

petitioner submits that the petitioner has already retired from his

service on 28.2.2009 and on his retirement the petitioner was

entitled to the payment of gratuity as well as his leave encashment.

Counsel also submits that the petitioner was placed under

suspension by the respondent w.e.f. 20.5.96 on account of alleged

irregularities in the import of urea

deal with M/s. Karsan Ltd. Ankara, Turkey after the preliminary

enquiry was held by the Vigilance Department. Counsel further

submits that the said suspension order was withdrawn by the

respondent w.e.f. 10.4.99, but simultaneously the charge sheet was

issued against the petitioner under Clause 32 of NFL Employees

(CDA) Rules for having committed irregularities and misconducts

in relation to the vetting of the contract dated 30.10.1995 for

import of Urea from M/s. Karsan Ltd. Ankara, Turkey. The

contention of the counsel for the petitioner is that the petitioner

was completely exonerated from the said charges and even the

suspension period was also directed to be treated as suspension

due. In support of her arguments, counsel for the petitioner has

placed reliance on the order dated 13.10.2004 passed by the

Chairman & Managing director of the respondent no.1 by virtue of

which the petitioner stood completely exonerated. Counsel also

submits that even a part of the gratuity amount has also been paid

by the respondent but still no amount towards the leave

encashment has still been paid by the respondent. Counsel for the

petitioner further submits that the respondent has wrongly placed

reliance on Rule 35A of NFL employees (CDA) Rules so as to

withhold gratuity and leave encashment as the said Rules only deal

with withholding of the gratuity amount during the pendency of

the disciplinary proceedings. Counsel further submits that the said

rule of CDA is not applicable in the case of leave encashment and

even otherwise the said rule can be invoked when the disciplinary

proceedings are pending against the delinquent employee and not

when the employee stands exonerated. Counsel thus submits that

as the respondent has completely exonerated the petitioner,

therefore the respondent has no legal right to withhold the payment

towards leave encashment due to the petitioner. Counsel for the

petitioner has also referred to the Minutes of the 336th Meeting of

the Board of Directors

held on 17.4.2009 in support of her arguments that even CBI has

not found any evidence against the petitioner and therefore the

name of the petitioner has been kept as a witness in column no. 2 of

the charge sheet. Counsel also submits that so far the alleged

violation of FERA proceedings are concerned, the concerned

criminal court will be competent enough to direct prosecution

against the guilty officials but the pendency of the said criminal

proceedings cannot come in the way of the respondent not to grant

release of the amount of the petitioner towards the leave

encashment.

4. Opposing the present petition, Mr. Joshi learned

counsel for the respondent submits that so far the part release of

the gratuity amount in favour of the petitioner is concerned, the

respondent has already filed a writ petition against the order of

the Controlling Authority under the Payment of Gratuity Act by

virtue of which order the respondent was directed to pay the

amount of gratuity. The contention of the counsel for the

respondent is that pending disposal of the said petition the

petitioner has withdrawn the said part of the gratuity amount from

the Authority and therefore the petitioner cannot take this

argument that the respondent has willfully and voluntarily paid the

amount to the petitioner. Counsel also submits that so far the

allegations of FERA violations against the petitioner are concerned,

the same shall be gone into only by the criminal court and not by

the respondent and therefore the respondent is well within its

right to withhold the said amount. In support of his arguments,

counsel for the respondent has placed reliance on the office

memo dated 10.9.96 and also the decision of the Board of Directors

of the respondent in their 214th meeting held on 16.8.96.

5. I have heard learned counsel for the parties and gone

through the records.

6. The petitioner joined the respondent as Company

Secretary on 1.7.94, and was further promoted to the post of Dy.

General Manager on 27.6.2005 and then w.e.f. 1.1.2007 he was

redesignated as Company Secretary and General Manager which

post he held till his retirement i.e. 28.2.2009. It is not in dispute

between the parties that the petitioner on his retirement was not

paid his dues i.e. gratuity and leave encashment. To claim

payment of the gratuity amount, the petitioner had approached

the Controlling Authority under the Payment of Gratuity Act and the

said Controlling Authority based on the fact that no disciplinary

proceedings are pending against the petitioner, held the petitioner

to be entitled to claim his gratuity amount on his superannuation

on 28.2.2009. The order of the Controlling Authority under the

Payment of Gratuity Act was assailed by the respondent before the

Appellate Authority and the Appellate Authority dismissed the

appeal filed by the respondent thereby upholding the decision

taken by the Controlling Authority. It is also not in dispute that

departmental proceedings were conducted by the respondent

against the petitioner after an FIR was registered by the CBI

questioning the said contract for the import of urea for which

hundred percent payment i.e. an amount of Rs. U.S.$ 38 million was

paid by the respondent to M/s. Karsan Ltd. Ankara, Turkey. It is

also not in dispute that separate proceedings were initiated by the

Enforcement Directorate against the petitioner for contravention of

FERA provisions and the said criminal proceedings are still pending

disposal before the concerned court of ACMM, Delhi. It is also not

in dispute that vide order dated 13.10.2004 the petitioner was

exonerated on account of his alleged role in the irregularities of

import of the said urea with the Turkish company. In the said

order, the Disciplinary Authority clearly observed that on the

basis of documentary and oral evidence and analysis of the enquiry

officer, Articles I, II, III and IV leveled against the petitioner were

held as "not proved".

7. It is manifest that the petitioner has been fully

exonerated in the said departmental proceedings, hence now the

question that arises for consideration before this court is that how

the respondent can claim that irregularities were committed by

him in the contract for the import of urea with the Turkish

Company. The Resolution dated 16.8.96 authorizes the respondent

to withhold the leave salary/ leave encashment only when the

disciplinary proceedings are pending against the employee on the

charge of having caused loss/damage to the company. The said

resolution passed by the respondent in their meeting held on

16.8.96 is reproduced 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."

As per the said resolution also the payment of leave salary and

leave encashment could be validly and legally withheld by the

respondent during the pendency of the disciplinary proceedings for

imposing of major penalty and such proceedings being under

contemplation and not otherwise.

8. It is a settled legal position that the departmental

enquiry and criminal proceedings are two distinct and separate

proceedings. It has been further held that the approach and the

objective in the criminal proceedings and the disciplinary

proceedings is altogether distinct and different. In the disciplinary

proceedings the question is whether the respondent is guilty of

such conduct as would merit his removal from service or a lesser

punishment, as the case may be, whereas in the criminal

proceedings the question is whether the offences registered against

him are established and, if established, what sentence should be

imposed upon him. It would be relevant here to the three bench

judgment of the Apex Court in the case of Depot Manager

A.P.SRTC vs. Mohd. Yousuf Miya(1997)2SCC699 wherein the

Court distinguished the two proceedings in detail as under:

"The purposes of departmental enquiry and of prosecution are two different and distinct aspects. Criminal prosecution is launched for an offence for violation of a duty the offender owes to the society, or for breach of which law has provided that the offender shall make

satisfaction to the public. So, crime is an act of commission in violation of law or of omission of public duty. The departmental enquiry is to maintain discipline in the service and efficiency of public service. It would, therefore, be expedient that the disciplinary proceedings are conducted and completed as expeditiously as possible. It is not, therefore, desirable to lay down any guidelines as inflexible rules in which the departmental proceedings may or may not be stayed pending trial in criminal case against the delinquent officer. Each case requires to be considered in the backdrop of its own facts and circumstances. There would be no bar to proceed simultaneously with departmental enquiry and trial of a criminal case unless the charge in the criminal trial is of a grave nature involving complicated questions of fact and law. Offence generally implies infringement of public duty, as distinguished from mere private rights punishable under criminal law. When trial for criminal offence is conducted it should be in accordance with proof of the offence as per the evidence defined under the provisions of the Indian Evidence Act, 1872 (in short "the Evidence Act"). Converse is the case of departmental enquiry. The enquiry in departmental proceedings relates to conduct or breach of duty of the delinquent officer to punish him for his misconduct defined under the relevant statutory rules or law. That the strict standard of proof or applicability of the Evidence Act stands excluded is a settled legal position. Under these circumstances, what is required to be seen is whether the departmental enquiry would seriously prejudice the delinquent in his defence at the trial in a criminal case. It is always a question of fact to be considered in each case depending on its own facts and circumstances."

Hence, when the two proceedings aim at different things, the

outcome of one cannot be dependent on the outcome of the other.

9. The Courts are time and again faced with the cases

where they have to judge that whether the departmental enquiry

should be stayed while the criminal proceedings on the same

charges are in progress and the settled position is that the two can

go on simultaneously and there can be no straitjacket formula for

determining as to in which cases the departmental enquiry should

be stayed and hence depends on facts and circumstances of each

case. It is also a settled legal position that the result of the criminal

trial is not binding on the departmental enquiry and the decision in

the two have to be according to its own procedure. There are cases

where the Apex Court has held that acquittal in a criminal trial

would not lead to immediate reinstatement and it is the

departmental proceedings on which the decision regarding to the

reinstatement, etc would depend. (State vs. G.Prem Raj

(2010)1SCC398).Hence it is quite manifest that the outcome of the

departmental enquiry would govern the conditions of employment.

The conditions of service and retrial benefits are dependant upon

the findings of the enquiry conducted by the department and not by

the criminal proceedings. 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 and is something he can fall back on after his

permanent source of income has ceased to exist and they cannot be

withheld if he has come clean in any enquiry conducted against

him. Hence, in the facts of the present case, the exoneration in

departmental proceedings is reason enough for the respondent to

release the dues of the employee. As far as the criminal

proceedings are concerned, it is not only that the petitioner is

facing the same but the proceedings are against the respondent

corporation and a lot of other employees of the corporation and the

fate of the case on merits would be decided by the concerned

criminal court and the respondent cannot be heard to say that till

the time of pendency of the criminal case, the retrial benefits

cannot be released.

9. In the light of the above, the respondent is directed to

release the amount due towards leave encashment of the petitioner

within one month from the date of this order alongwith interest at

@8% p.a from the date of retirement till the actual payment.

10. With the above directions, the present petition stands

disposed off.

JULY       , 2011                          KAILASH GAMBHIR, J