Delhi High Court
National Textile Corporation Ltd vs S B Singh on 18 March, 2021
$-10
* IN THE HIGH COURT OF DELHI AT NEW DELHI
% Date of decision: 18th March, 2021.
+ LPA 4/2021 & CM APPL. 126/2021 (for stay)
NATIONAL TEXTILE CORPORATION LTD ..... Appellant
Through: Mr. Ajit Pudussery, Adv.
Versus
S B SINGH ..... Respondent
Through: Ms. Purti Gupta, Ms. Henna George
and Ms. Twisha Issar, Advs.
CORAM:
HON'BLE MR. JUSTICE RAJIV SAHAI ENDLAW
HON'BLE MR. JUSTICE AMIT BANSAL
JUDGMENT
AMIT BANSAL, J. (Oral)
1. On 5th January, 2021, when this appeal first came up for
consideration, the following order was passed:-
3. The appeal impugns the judgment dated 17th November,
2020 of the Single Judge in W.P.(C) No.3114/2020 instituted by
the respondent, seeking a mandamus directing the appellant to
release the retiral benefits comprising of gratuity, leave
encashment and provident fund (PF) to the respondent. During
the pendency of the petition, the respondent‟s share of PF was
released to the respondent, with the appellant‟s share of PF
amount only being retained/withheld. Further, though the
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respondent, in the writ petition had sought release of gratuity
also, but during the hearing before the Single Judge, gave up
the relief of release of gratuity and agreed to the same being
withheld by the appellant, till the culmination of the disciplinary
proceedings initiated against the respondent. Thus, only the
claim for release of leave encashment amount and the
employer‟s share of PF amount remained for adjudication
before the Single Judge and the Single Judge, vide the
impugned judgment has directed the appellant to release both
the said amounts to the respondent. Aggrieved therefrom, this
appeal has been preferred.
4. We have heard the counsel for the appellant as well as
the counsel for the respondent, appearing on advance notice, at
length.
5. We will first deal with the impugned direction of the
Single Judge, insofar as it concerns the release of the leave
encashment amount. Leave encashment of the employees of the
appellant is governed by the National Textile Corporation
Limited Leave Rules, 2015 and Rule 7 whereof deals with Leave
Encashment. Rule 7.7 inter alia permits the authority competent
to grant encashment of leave, to withhold whole or part of cash
equivalent of earned leave, in case of any employee who retires
from service on attaining the age of superannuation, while
under suspension or while disciplinary or criminal proceedings
are pending against him, if in the view of such authority there is
possibility of some money becoming recoverable from him on
conclusion of the proceedings against him. The Single Judge, in
the impugned judgment has held that since there was no finding
returned or opinion expressed in the order withholding the
amount of leave encashment, of a possibility of some money
becoming recoverable from the respondent on conclusion of the
disciplinary proceedings initiated against him, the amount due
towards leave encashment could not be withheld. Reliance was
placed on Satya Prakash Vs. Chairman Cum Managing
Director, Bharat Sanchar Nigam Ltd. 2019 SCC OnLine Del
8039 and Govt. of NCT of Delhi Through Chief Secretary Vs.
Prem Nath Manchanda 2018 SCC OnLine 13066, laying down
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that for leave encashment amount to be withheld, there has to
be an express opinion in the order withholding the leave
encashment amount, of such possibility and which did not exist
in the present case.
6. The counsel for the appellant has not impugned the
aforesaid reasoning. He has however drawn our attention to the
Conduct, Discipline and Appeal Rules, 2009 of the appellant,
Rule 25.13 titled "Continuation of Enquiry Beyond
Superannuation" whereof inter alia provides, that (i)
disciplinary proceedings, if instituted while the employee was in
service, whether before his retirement or during his re-
employment, shall, after the final retirement of the employee, be
deemed to be subsisting and shall be continued and concluded
by the authority by which it was commenced, in the same
manner as if the employee had continued in service; and, (ii) in
such cases, the employee will cease to be in service from the
date of superannuation/retirement but will not be entitled to
payment of retirement benefits till the proceedings are
completed and final order is passed thereon, except his own
contribution to Contributory Provident Fund.
7. The counsel for the appellant has contended that the
impugned judgment does not consider that the word „instituted‟
used in the aforesaid Rule 25.13.1 and which word has been
held to mean, the date when a decision to initiate disciplinary
proceedings has been taken. He has contended that since in the
present case, though Show Cause Notice dated 31st January,
2020 was served on the respondent on 1st February, 2020 i.e.
very next day of his superannuation on 31st January, 2020, but
the disciplinary proceeding against the respondent is deemed to
have been instituted on 31st January, 2020 i.e. during his
employment with the appellant; it is stated that till 31st
January, 2020 the respondent was in the employment of the
appellant.
8. We have enquired from the counsel for the appellant,
whether leave encashment can be considered as a retiral
benefit.
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9. The counsel for the appellant has referred us to Rule 7
aforesaid of the Leave Rules and on a reading whereof we are
satisfied that the leave encashment, as per the said rule, is a
retiral benefit.
10. The contention of the counsel for the appellant is that the
Single Judge has not considered that besides the Leave Rules,
the aforesaid Rule 25.13 of Conduct, Discipline and Appeal
Rules would also apply.
11. We are unable to agree. Leave encashment, though a
retiral benefit, having been dealt with separately, under the
Leave Rules which lay down their own condition/s for
withholding of leave encashment, we are of the view that no
case of the appellant being entitled to withhold the leave
encashment amount, also as a retiral benefit, under Rule 25.13,
is made out. To withhold the amount of leave encashment, the
provisions of the Conduct, Discipline and Appeal Rules, cannot
be applied, without the Leave Rules, expressly providing so. No
ground to interfere with the direction of the Single Judge, to the
appellant, to release the leave encashment amount to the
respondent, is thus made out and the appeal to that extent, is
dismissed.
12. We however find merit in the contention of the counsel
for the appellant, that the Single Judge has not considered that
the disciplinary proceedings in the present case were instituted
prior to retirement of the respondent. We have however
enquired, whether the retirement / superannuation of the
respondent was in the forenoon or afternoon of 31 st January,
2020 and whether any such thing is mentioned/specified in the
records, as is found in cases of certain other departments,
particularly Armed Forces. If it is so, and the
retirement/superannuation of the respondent were to be in the
forenoon and the decision to initiate disciplinary proceeding
was taken in the afternoon, then also, what is argued by the
counsel for the appellant, will not follow inasmuch as the
institution of the disciplinary proceeding would be after the
superannuation of the respondent.
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13. We have also enquired from the counsel for the
appellant, whether not institution of a legal proceeding in a
Court is different from institution of a disciplinary proceeding,
because unlike a proceeding in the Court, which is deemed to
be instituted on the date of filing in the Court, a disciplinary
proceeding commences with the issuance of a show cause notice
and which is a 'communication' within the meaning of Sections
3 & 4 of the Indian Contract Act, 1872 and if it is so, then even
if a decision is taken to institute the proceedings, unless the said
decision is communicated to the employee, it cannot be said that
the disciplinary proceedings were instituted prior to
retirement/superannuation of the employee.
14. The Single Judge has held that the disciplinary
proceedings in the present case were initiated after
superannuation and in which case there is no power to withhold
the retiral benefits.
15. Though we have heard the counsels for some time but it
appears that decision on the said aspect requires consideration
and preparation by the counsels.
16. Issue notice of the appeal qua the aforesaid aspect of
payment of the appellant‟s share of PF to the respondent,
during the pendency of disciplinary proceedings.
17. Notice is accepted by the counsel for the respondent.
18. List for hearing on 18th March, 2021.
19. Till further orders, the direction of the Single Judge in
the impugned judgment, to the extent of directing the appellant
to release appellant‟s share of PF to the respondent, shall
remain stayed.
20. Pendency of this appeal to not come in the way of
expeditious disposal of the disciplinary proceeding, which we
are informed, under the Rules are required to be completed
within four to five months. The appellant is directed to ensure
timely conduct of the disciplinary proceeding, within the time
stipulated in the Rules and the respondent is directed to
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cooperate in the same. The status of the disciplinary proceeding
be also informed on the next date.
2. Our attention has been drawn by the counsel for the appellant to the
Office Order dated 19th February, 2020, which states that the respondent, on
attaining the age of superannuation, has been superannuated "on closing
hours of 31st January, 2020". As per counsel for the appellant, „closing
hours‟ would mean 06:00 PM on 31st January, 2020. Our attention is also
drawn by the counsel for appellant to the note-sheet dated 31st January, 2020
in the files maintained by the appellant, wherein the following is noted:-
"In this regard it is informed that, vide note dated 31.01.2020
(sent to Sr. Manager (HR) from the Office of CVO NTC Ltd.
In the forenoon), you have already been informed to issue
Charge sheet to Sh. S.B. Singh, CGM (Fin/MIS) in the above
said matter."
3. The counsel for the appellant has also placed reliance on another
noting dated 31st January, 2020 handed over in the course of the hearing,
wherein CMD of the appellant Corporation has signed the Memorandum of
Charge to be served on the respondent on 31st January, 2020.
4. The counsel for appellant thus contends that the Single Judge, in the
impugned judgment, has wrongly concluded that the respondent
superannuated on 31st January, 2020 and till that time no charge-sheet was
issued to him.
5. The counsel for the appellant has placed reliance on the relevant
provisions of the Rules, which are set out below:-
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"25.13 Continuation of inquiry beyond Superannuation:
25.13.1. Disciplinary proceedings, if instituted while the
employee was in service whether before his retirement or
during his re-employment shall, after the final retirement of
the employee, be deemed to be subsisting proceedings and
shall be continued and concluded by the authority by which it
was commenced in the same manner as if the employee had
continued 1n service.
25.13.2. In such cases, the employee will cease to be in the
services of the Corporation from the date of
superannuation/retirement and will not be eligible for salary
or any other benefits from the date following the date of
superannuation/retirement. He will also not be entitled to the
payment of retirement benefits till the proceedings are
completed and final order is passed thereon, except his own
contribution to Contributory Provident Fund."
25.13.3 Disciplinary proceedings, if not initiated while the
employee was in service shall be initiated against an employee
in respect of prima facie established lapses/misconduct after
retirement in respect of grave misconduct in respect of any
event which took place not more than four years earlier."
(emphasis supplied)
6. It is contended by the counsel for the appellant that in the present
case, disciplinary proceedings were instituted while the employee was in
service and before his retirement, in terms of Rule 25.13.1 and therefore in
terms of Rule 25.13.2, the employee will not be entitled to payment of
retirement benefits till the proceedings are completed and final order is
passed thereon, except his own contribution to the contributory provident
fund, which has already been released to the respondent. He further submits
that Rule 25.13.3 will not be applicable in this case.
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7. Per contra it is contended by the counsel for the respondent that since
the Charge Memo was served on the respondent only on 1st February, 2020,
it cannot be said that the disciplinary proceedings were instituted while the
respondent was in service. As per the counsel, the relevant date when the
disciplinary proceedings can be said to have been instituted would be the
date when the Memorandum of Charge was served upon the respondent;
admittedly, the Memorandum of Charge was served on the respondent on 1 st
February, 2020, whereas the respondent had retired on 31 st January, 2020
and hence Rules 25.13.1 and 25.13.2 would have no application and Rule
25.13.3 would apply, which permits the disciplinary proceedings to be
initiated against an employee after his retirement in respect of a grave
misconduct in respect of an event which took place within four years of his
retirement date; however, in this scenario, the retirement benefits of the
employee cannot with withheld, as Rule 25.13.2 would not apply. The
counsel for the respondent has placed reliance on the following judgments:-
(i) Union of India and Others Vs. K.V. Jankiraman and Others (1991)
4 SCC 109;
(ii) UCO Bank and Another Vs. Rajinder Lal Capoorb (2007) 6 SCC
694;
(iii) Coal India Ltd. and Others Vs. Saroj Kumar Mishra (2007) 9
SCC625.
8. Insofar as judgment of the Hon‟ble Supreme Court in Jankiraman
(supra) is concerned, it was held therein that sealed cover procedure is to be
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resorted to only after the Charge Memo has been issued to the employee.
The said dicta would have no application in the present case.
9. Insofar as the judgment of the Hon‟ble Supreme Court in UCO Bank
(supra) is concerned, relying upon the judgment of the Hon‟ble Supreme
Court in Coal India Ltd. (supra), it was held that date of application of mind
on the allegations levelled against an officer by the Competent Authority as
a result whereof a charge-sheet is issued, would be the date on which the
disciplinary proceedings are stated to have been initiated and not prior
thereto. The dicta of the said judgment supports the case of the appellant
inasmuch as the appellant has shown that in the present case the application
of mind to issue a Charge Memo to the respondent took place on 31 st
January, 2020 before the time the respondent superannuated. The file noting
shown by the appellant clearly shows that the competent authority had
applied its mind and decided to issue memorandum of charge to the
respondent on 31.01.2020. The mere fact that memorandum of charge was
served upon the respondent on 01.02.2020 would not be relevant for the
purpose of Rule 25.13.1 and 25.13.2.
10. Therefore, the respondent‟s case would be covered under Rule
25.13.1 as the disciplinary proceedings were instituted while the employee
was in service, before this retirement. Accordingly, in terms of Rule 25.13.2,
the respondent will not be entitled for payment of retiral benefits till the
disciplinary proceedings are completed and a final order is passed thereon,
except of his own contribution to the provident fund.
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11. Accordingly, the present appeal is party allowed and the judgment of
the learned Single Judge is set aside to the extent it directs release of
appellant‟s share of contribution to the Provident Fund.
AMIT BANSAL, J.
RAJIV SAHAI ENDLAW, J.
MARCH 18, 2021
A
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