Food Corporation Of India vs Union Of India
2022 Latest Caselaw 4841 Patna

         IN THE HIGH COURT OF JUDICATURE AT PATNA
                   Civil Writ Jurisdiction Case No.11529 of 2019
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Food Corporation of India through General Manager(Region), Regional Office, Arunachal Building, Exhibition Road, Patna-1. ... ... Petitioner/s Versus

1. Union of India through the secretary, Ministry of Labour and Employment, New delhi.

2. The Assistant Labour Commissioner (Central), Patna, 2nd, Floor, Maurya Complex, P.S. Kotwali, District-Patna

3. The Deputy Chief Labour Commissioner (Central), Patna,

4. Agendra Nath Dubey, Son of Late-Nand Kishore Dubey, Resident of Gannipur, South of Law College, P.O. Muxaffarpur, Dist. Muzaffarpur.

5. Directorate general of Mines Satety, Ministry of Labour and Employment, Sardar Patel Nagar, Dhanbad, Jharkhand-826001 ... ... Respondent/s ====================================================== Appearance :

For the Petitioner/s : Mr. Saket Tiwary, Advocate. For the Respondent No.4: Mr. Uday Prakash Sharma, Advocate. For the Respondent/s : Mrs. Kanak Verma, CGC. ====================================================== CORAM: HONOURABLE MR. JUSTICE HARISH KUMAR ORAL JUDGMENT Date : 06-12-2022 Heard Mr. Saket Tiwary, learned counsel for the

petitioner, Mr. Uday Prakash Sharma, learned counsel for the

respondent no.4 and Mrs. Kanak Verma, learned central

government counsel for the Union of India.

2. By filling the present writ application, the petitioner

Food Corporation of India seeks quashing of the order dated

30/31.01.2019 passed by the Deputy Chief Labour Commissioner

(Central) Patna -cum- Appellate Authority under payment of

Gratuity Act, 1972, by which the Appellate Authority has upheld

the order of the Controlling Authority dated 31.01.2018 directing

payment of gratuity to the respondent no.4 as also for quashing of Patna High Court CWJC No.11529 of 2019 dt.06-12-2022

the order of the Controlling Authority dated 31.01.2018, by which

the Controlling Authority has directed the petitioner to pay gratuity

to the respondent no.4 amounting to Rs.8,66,411/- along with 10

per cent interest with effect from 31.09.2012 till the date of

payment. The petitioner further seeks a direction to restrain the

Labour Authorities to release the deposited amount of

Rs.8,66,411/-.

3. The short facts, which led to the filing of present writ

application is that in the year 2011, while the respondent no.4 was

posted as AG-I (Depot) at FSD NRPA, under Food Corporation of

India, D.O. Muzaffarpur holding the charge of stock and store as

In-charge of shed no.1, shortage of 7,318 bags of Rice and 7940

bags of wheat of total amounting to Rs.1,41,08,020/- was detected

during special physical verification.

4. A departmental enquiry was conducted under

Regulation 58 and 60A of the Food Corporation of India (Staff)

Regulation, 1971 and finally on being found the charges proved,

the respondent no.4 inflicted with the penalty of compulsory

retirement from service with token recovery of Rs.10,00,000/- in

lump-sum, which was to be recovered from the terminal dues

including gratuity vide order dated 30.08.2012 (Annexure-5 to the

writ petition).

Patna High Court CWJC No.11529 of 2019 dt.06-12-2022

5. The said order of Disciplinary Authority was

challenged by the respondent no.4 before the Appellate Authority,

however, after considering the amount of loss suffered by the

Corporation the Appellate Authority modified the order of

punishment to the extent of compulsory retirement from the

service of the Corporation with forfeiture of entire amount of

gratuity of the respondent no.4. The respondent no.4 being

aggrieved, assailed the order of punishment as well as the

Appellate Authority before the Central Government Industrial

Tribunal (CGIT), Dhanbad, by filing Complaint Case No. 01 of

2013. The learned Central Government Industrial Tribunal,

Dhanbad, vide award dated 12.08.2013 held that dismissal of

respondent no.4 by the petitioner is illegal.

6. The aforesaid award was challenged by the

management of Food Corporation of India by filing W.P. (L)

No.2041 of 2014 before the Hon'ble Jharkhand High Court and

the Hon'ble Court vide order dated 06/05.02.2016 having heard

the parties has been pleased to quash the award dated 12.08.2013

passed by the Central Government Industrial Tribunal (CGIT),

Dhanbad and remitted the matter back to the Tribunal in respect of

respondent no.4, which is still pending. During the pendency of

the matter before the Hon'ble Jharkhand High Court, the Patna High Court CWJC No.11529 of 2019 dt.06-12-2022

respondent no.4 moved before the Controlling Authority under the

Payment of Gratuity Act, 1972 and the Assistant Labour

Commissioner (Central), Pakur, vide order dated 31.01.2018

directed the petitioner for making payment of gratuity of

Rs.8,66,411/- along with interest at the rate of 10 per cent with

effect from 31.09.2012 to the date of payment, the aforesaid order

of the Controlling Authority as well as the Appellate Authority are

subject matter of this writ application.

7. Aggrieved by the aforesaid order the petitioner filed

appeal before the Deputy Chief Labour Commissioner (Central),

Patna, under the Payment of Gratuity Act, 1972, however, the

Appellate Authority vide order 30/31.01.2019 dismissed the appeal

of the petitioner upholding the order passed by the Controlling

Authority.

8. Mr. Saket Tiwary, learned counsel for the petitioner

vehemently submitted that from reading of Section 4 (6)(a) of the

Payment of Gratuity Act, it will be apparent that if service of an

employee is 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 whereas Section 4(6)(b) says that the

service of an employee is terminated for any act which constitutes Patna High Court CWJC No.11529 of 2019 dt.06-12-2022

an offence involving moral turpitude, his gratuity may be forfeited

either in whole or partially. He submits that the order of

termination i.e. compulsory retirement from service of the

respondent no.4 is as per Section 2(q) of the Payment of Gratuity

Act as the respondent no.4 has been punished by way of

compulsory retirement because of moral turpitude which has

caused a loss to the Corporation to the tune of Rs.1.6 crore and

odd.

9. He next submits that the impugned orders have been

passed in teeth of the law laid down by the Hon'ble Apex Court

in a judgment of State Bank of India Vs. Ramlal Bhaskar and

others reported in 2011(10) SCC 249 and as such the claim of the

respondent no.4 beyond the order of penalty and forfeited of

gratuity was not maintainable and so fit to be rejected.

10. He further submitted that now the issue involve in

the present writ application has already been set at rest by a three

Judges Bench of the Hon'ble Supreme Court in the case of

Chairman-cum-Managing Director, Mahanadi Coalfields

Limited Vs. Sri Rabindranath Choubey reported in 2020 (3)

PLJR (SC) 438.

11. On the other hand, learned counsel for the

respondent no.4 by referring to the statements made in his counter Patna High Court CWJC No.11529 of 2019 dt.06-12-2022

affidavit vehemently contended that the Payment of Gratuity Act,

1972 is an independent act, which seeks to protect the interest of

an employee in so far as the payment of gratuity is concerned.

Under gratuity act, gratuity can be withheld only on the ground

which has been enumerated under Section 4 (6) of the said Act and

not otherwise. He submits that the respondent no.4 has not been

terminated from service rather he has been made to retire

compulsorily on 30.08.2012, while his actual date of retirement

was 31.01.2015, hence, the provision contained under Section 4

(6) of the Act does not debar him from being entitled to gratuity in

any manner. He next submits that the impugned order passed by

the Controlling Authority as well as Appellate Authority is in

consonance with the provisions of the Gratuity Act and do not

require any interference.

12. The moot question for consideration before this

court is as to whether the payment of gratuity will be subject to the

outcome of the Departmental Proceeding or the authority under

Gratuity Act has rightly passed the order for payment of gratuity.

The identical issue involved in the present writ application was

pending consideration before the Hon'ble Supreme Court in Civil

Appeal No. 9693 of 2013 (Chairman-cum-Managing Director,

Mahanadi Coalfields Limited Vs. Sri Rabindranath Choubey) Patna High Court CWJC No.11529 of 2019 dt.06-12-2022

and the three Judges Bench of the Hon'ble Supreme Court having

considered the various aspect of the matter including the relevant

provisions of the Payment and Gratuity Act, 1972 has been pleased

to held that:

"The provisions of Section 4(6) of the Act of 1972 prevail over Section 4(1) as provisions of Section 4(6) contain non-obstante clause as to Section 4(1). It would prevail over the provisions made in Section 4(1) and gratuity would not become payable mandatorily as provided in Section 4(1). The provisions of Section 4(6) provide recovery or forfeiture where services of employee have been terminated for the reasons prescribed in Section 4(6)(a) and 4(6)(b). Section 4(6)(a) and (b) both provide for recovery of loss caused or forfeiture wholly or partially in the case of termination of services. In case after superannuation of employee there cannot be any dismissal i.e., termination of services as contemplated in Section 4(6), then there can be no recovery of pecuniary loss caused by employee or forfeiture of gratuity wholly or partially as that can only be done in the event of termination of services on charges found established. Such an interpretation would render continuance of enquiry otiose and would defeat the public policy and the provisions of Act of 1972. The recovery of loss or forfeiture is one of the punishments which depends on exigency of termination by way of dismissal as mandated by Section 4(6). To give effect to the provisions of the Act, the punishment of dismissal can be imposed in view of Rule 34.2, otherwise it would defeat the intendment of provisions contained in Section 4(6)(a) and 4(6)(b) of the Act of 1972. "

Patna High Court CWJC No.11529 of 2019 dt.06-12-2022

13. This Court also thinks it apt and proper to quote

paragraph nos. 38 and 39 of the aforesaid judgment in order to

crystallize the matter in issue, which reads as follows:

"38. Taking note of the exposition of law which has been noticed and of the scheme of Rules, 1978, which indubitably has a binding force and are not a subject matter under challenge and are neither in derogation nor in contravention to the scheme of Payment of Gratuity Act, 1972. I have no hesitation in holding that the substantive penalties provided under the schedule of penalties referred to under Rule 27 could be inflicted on a delinquent employee while he is in service but in case where the delinquent employee stood retired or superannuated from service pending disciplinary inquiry, at least either of the substantive penalties provided under Rule 27 are not available to the disciplinary authority to be inflicted with retrospective effect but at the same time punishment of forfeiture of gratuity if held guilty for misconduct or negligence to the extent damage or pecuniary loss has been caused to the employer can be inflicted upon the delinquent in terms of Rule 34.3 of Rules 1978 read with sub section (6)

of Section 4 of the Act, 1972 and in case the delinquent employee stands exonerated he became entitled for gratuity

for the delay in payment in terms of Sections 7(3) and

7(3A) of Act, 1972 and as a matter of caution, it should not be presupposed that where the disciplinary inquiry remain pending and could not be concluded while the delinquent employee was in service in due course of time, he shall be held guilty and punished under the scheme of Rules, 1978.

39. To sum up, my conclusion to the question is as under:

Patna High Court CWJC No.11529 of 2019 dt.06-12-2022

Que. 1 Whether it is permissible in law for the employer to withhold the payment of gratuity even after the employee has attained his superannuation from service because of the pendency of disciplinary proceedings against him?

Ans. I am in agreement with the view expressed by brother Justice Shah that in view of Rule 34.3 of the Rules, 1978, the employer has a right to withhold gratuity during pendency of the disciplinary proceedings.

Que. 2 Whether the penalty of dismissal could be imposed after the employee stood retired from service?

Ans. In my considered view, after conclusion of the disciplinary inquiry, if held guilty, indeed a penalty can be inflicted upon an employee/delinquent who stood retired from service and what should be the nature of penalty is always depend on the relevant scheme of Rules and on the facts and circumstances of each case, but either of the substantive penalties specified under Rule 27 of the Rules, 1978 including dismissal from service are not open to be inflicted on conclusion of the disciplinary proceedings and the punishment of forfeiture of gratuity commensurate with the nature of guilt may be inflicted upon a delinquent employee provided under Rule 34.3 of Rules, 1978 read with sub-section (6) of Section 4 of the Act, 1972."

14. Considering the aforesaid ratio laid down by the

Hon'ble Apex Court in the case of Chairman-cum-Managing

Director, Mahanadi Coalfields Limited Vs. Sri Rabindranath

Choubey (supra) this court is of the opinion that before

superannuation of an employee, who was departmentally

proceeded with and in terms of the regulation, inflicted with the Patna High Court CWJC No.11529 of 2019 dt.06-12-2022

punishment of compulsory retirement from the service of the

Corporation with forfeiture of entire amount of gratuity the

employee would only be entitled for payment of gratuity on the

basis of outcome of the departmental proceeding which at present

admittedly against the respondent no.4 and the matter between the

parties is still pending before the Central Government Industrial

Tribunal (CGIT), Dhanbad. Hence, the impugned order of the

controlling authority dated 31.01.2018 as contained in Annexure-2

directing the petitioner to pay gratuity to the respondent no.4 as

also the appellate order dated 30/31.01.2019 as contained in

Annexure 1 to the writ petition upholding the order of the

Controlling Authority are hereby set aside.

15. It is needless to say that the payment of gratuity shall

be subject to the final outcome of Complaint Case No.1 of 2013.

This court hopes and trust that the Tribunal will make all possible

endeavour to dispose of this case expeditiously.

16. In view of the aforesaid settled legal position, the

writ application is hereby allowed. There shall be no order as to

cost.

(Harish Kumar, J) manoj/-

AFR/NAFR                AFR
CAV DATE                NA
Uploading Date          08.12.2022.
Transmission Date       NA