Jaswant
Singh Gill Vs. M/S. Bharat Coking Coal Ltd. & Ors [2006] Insc 778 (10
November 2006)
S.B.
Sinha & Markandey Katju
(Arising
out of SLP (C) No. 16827 of 2004) S.B. Sinha, J.
Leave
granted.
Respondent
Bharat Coking Coal Limited is a government company incorporated and registered
under the Companies Act, 1956. Appellant herein joined as a Chief General
Manager. He was working in a coking coal mine which vested in the Bharat Coking
Coal Limited pursuant to an appropriate notification issued by the Central
Government either under Section 7 of the Coking Coal Mines (Nationalisation)
Act, 1972 or Section 5 of the Coal Mines (Nationalisation) Act, 1973.
A chargesheet
was issued against him on the allegation of shortage of stock of coal in Lodna
area of Respondent No. 1. During pendency of the departmental proceeding, the
appellant was allowed to retire. He applied for payment of gratuity under the
Payment of Gratuity Act, 1972 (for short "the Act") in the year 1998
which was denied. He, therefore, filed an application before the Additional Labour
Commissioner, Dhanbad for payment of gratuity on 4.01.2000. Notices having been
issued by the said authority, Respondent No. 1 filed reply thereto inter alia
contending that the gratuity amount payable to the appellant had been withheld
for the purpose of making of adjustment, in the event recovery from the said
amount is directed to be made in the disciplinary proceedings. The controlling
authority on the said premise allowed the disciplinary authority to proceed in
the matter.
Upon
conclusion of the departmental enquiry, the disciplinary authority by an order
dated 5.07.2000 opined:
"Whereas
the undersigned has gone through the chargesheet dated 24.02.97 issued to Shri
Gill, enquiry proceedings and report of Inquiring Authority dated 18.08.99 and
other documents related to the case placed before him. After careful
consideration of all the documents placed in the case file, the undersigned, is
convinced that Shri Gill had a major role in causing the shortages in the coal
stock and conniving with the measurement team in concealing the shortages at
the time of annual measurement.
Now,
therefore, the undersigned, Chairman- cum-Managing Director, Coal India Limited
being the Disciplinary Authority in exercise of power conferred by the Conduct
Discipline and Appeal Rules 1978 of CIL, considering the seriousness of the
offence would have imposed the punishment of dismissal from the service of Shri
J.S. Gill, the then Chief General Manager, BCCL, but for his superannuation.
The undersigned also hereby orders forfeiture of his gratuity." The
Assistant Labour Commissioner (Central), Dhanbad in the application filed by
the appellant under the Act, on the other hand, by an order dated 11.04.2001
held:
"It
is clear that Shri J.S. Gill retired on superannuation as per notice for
retirement w.e.f. 30.4.98, therefore, he is entitled for the payment of
gratuity under the P.G. Act, 1972. As per section 4(6)(a) & 4(6)(b) of the
P.G. Act, 1972, gratuity can be forfeited partially or wholly when the service
of the employee is terminated for any act, which constitute an offence
involving moral turpitude provided that such offence is committed by him in the
course of employment. In the instant case, the services of Sri J.S. Gill has not
been terminated for the offence mentioned under 4(6)(a) & 4(6)(b) of the
P.G. Act, 1972. Therefore, the order of forfeiture of gratuity of Sri J. S.
Gill issued by the C.M.D. and Disciplinary Authority of CIL is not tenable. The
basic requirement of termination of service for any of the misconduct as
enumerated under section 4(6)(a) & 4(6)(b) of the P.G. Act, 1972 has not
been fulfilled before the issue of order of forfeiture of gratuity." On an
appeal preferred by Respondent No. 1, the appellate authority held:
"3.
The appellant has appealed against the direction of the Controlling Authority
directing to pay the gratuity to the respondent on the ground that it was
beyond his jurisdiction for enter into merit of the forfeiture of the gratuity
amount by the competent authority under Section 4(6) of the Act for the reasons
mentioned therein. On the other hand the respondent had also filed an appeal
about not allowing interest by the Controlling Authority for delayed payment of
gratuity which is numbered as P.G. Appeal/(53)/2001. Since the matter of appeal
filed by the Appellant and the respondent is against the same direction of the
controlling authority hence both cases heard jointly and their oral argument
were heard and hearing was concluded on that date.
4. ***
***
5.
From perusal of the case record of the Controlling Authority it is observed
that the respondent submitted an application in form N on 5.1.2001 after his
superannuation from 30.4.1998 when the appellant did not pay the gratuity
amount. It is observed from the decision/ direction of the Controlling
Authority that he has rightly determined the amount of gratuity as well as
correctly interpreted Section 4(6) of the Payment of Gratuity Act, 1972. For
Application of Section 4(6) it is pre-condition that the service should have
been terminated for any act. For the purpose of section 4(6)(a) such act should
be about 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 and for the purpose of sub-section
4(6)(b) the gratuity can be forfeited wholly or partially only if the services
of such employee have been terminated for his riotous or disorderly conduct or
any other act of violence etc. on his part. It is observed from the punishment
order that the services have not been terminated and rather could not have been
terminated and also does not indicate the extent of damage of loss.
Since
neither the service terminated nor there is anything about extent/
quantification of damage or loss in punishment order, question of forfeiture of
gratuity does not arise as per Section 4(6)." Aggrieved by and
dissatisfied with the orders of the authority under the Act as also the appellate
authority, a writ petition was filed by Respondent No. 1 in the High Court of Jharkhand
at Ranchi which was marked as W.P.(C) No.
5957 of 2001. By a judgment and order 13.12.2001, a learned Single Judge of the
said refused to interfere therewith and dismissed the writ petition. In an
intra-court appeal preferred by Respondent No. 1, a Division Bench of the said
Court, however, set aside the judgment and order of the learned Single Judge
opining:
"In
our opinion, the Controlling Authority under the Act being not the appellate or
the Competent Authority against the order dated 5.7.2000 passed by the
CMD-cum-Disciplinary Authority inflicting punishment of forfeiture of gratuity
against the respondent no. 3 the comments on the said order as well as
interference therewith either by him or the Appellate Authority under section
7(7) of the Act is unwarranted and without jurisdiction." The appellant
is, thus, before us.
The
short question which arises for consideration in this appeal is as to whether
the provisions of the said Act shall prevail over the rules framed by Coal
India Limited, holding company of Respondent No. 1, known as Coal India
Executives' Conduct Discipline and Appeal Rules, 1978 (for short "the
Rules"). Indisputably, the appellant was governed by the Rules.
Rule
27 provides for the nature of penalties including 'recovering from pay or
gratuity of the whole of or part of any pecuniary loss caused to the company by
negligence or breach of orders or trust'. Major penalties prescribed in Rule
27, however, include reduction to a lower grade, compulsory retirement, removal
from service; and dismissal. Rule 34 provides for special procedure in certain
cases stating:
"34.2
Disciplinary proceeding, 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 proceeding 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.
34.3
During the pendency of the disciplinary proceedings, the Disciplinary Authority
may withhold payment of gratuity, for ordering the recovery from gratuity of
the whole or part of any pecuniary loss caused to the company if have been
guilty of offences/ misconduct as mentioned in Sub-section (6) of Section 4 of
the Payment of Gratuity Act, 1972 or to have caused pecuniary loss to the
company by misconduct or negligence, during his service including service
rendered on deputation or on re-employment after retirement.
However,
the provisions of Section 7(3) and 7(3A) of the Payment of Gratuity Act, 1972
should be kept in view in the event of delayed payment, in the case the
employee is fully exonerated." The Act was enacted with a view to provide
for a scheme for payment of gratuity to employees engaged inter alia in mines.
Section 3 of the Act provides for appointment of an officer to be the
controlling authority.
Controlling
authority is to be responsible for administration of the act.
Different
authorities, however, may be appointed for different areas. Section 4 of the
Act entitles an employee to gratuity after he has rendered continuous service
for not less than five years inter alia on his superannuation. Sub- section (6)
of Section 4 contains a non-obstante clause stating:
"(a)the
gratuity of an employee, whose services have been terminated for any act, wilful
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 or 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." The Rules framed by the Coal India Limited
are not statutory rules.
They
have been made by the holding company of Respondent No. 1.
The
provisions of the Act, therefore, must prevail over the Rules.
Rule
27 of the Rules provides for recovery from gratuity only to the extent of loss
caused to the company by negligence or breach of orders or trust.
Penalties,
however, must be imposed so long an employee remains in service. Even if a
disciplinary proceeding was initiated prior to the attaining of the age of
superannuation, in the event, the employee retires from service, the question
of imposing a major penalty by removal or dismissal from service would not
arise. Rule 34.2 no doubt provides for continuation of a disciplinary
proceeding despite retirement of employee if the same was initiated before his
retirement but the same would not mean that although he was permitted to retire
and his services had not been extended for the said purpose, a major penalty in
terms of Rule 27 can be imposed.
Power
to withhold penalty contained in Rule 34.3 of the Rules must be subject to the
provisions of the Act. Gratuity becomes payable as soon as the employee
retires. The only condition therefor is rendition of five years continuous
service.
A
statutory right accrued, thus, cannot be impaired by reason of a rule which
does not have the force of a statute. It will bear repetition to state that the
Rules framed by Respondent No. 1 or its holding company are not statutory in
nature. The Rules in any event do not provide for withholding of retrial
benefits or gratuity.
The
Act provides for a closely neat scheme providing for payment of gratuity. It is
a complete code containing detailed provisions covering the essential
provisions of a scheme for a gratuity. It not only creates a right to payment
of gratuity but also lays down the principles for quantification thereof as
also the conditions on which he may be denied therefrom. As noticed
hereinbefore, sub-section (6) of Section 4 of the Act contains a non- obstante
clause vis-`-vis sub-section (1) thereof. As by reason thereof, an accrued or
vested right is sought to be taken away, the conditions laid down thereunder
must be fulfilled. The provisions contained therein must, therefore, be
scrupulously observed. Clause (a) of Sub-section (6) of Section 4 of the Act
speaks of termination of service of an employee for any act, willful omission
or negligence causing any damage. However, the amount liable to be forfeited
would be only to the extent of damage or loss caused. The disciplinary
authority has not quantified the loss or damage. It was not found that the
damages or loss caused to Respondent No. 1 was more than the amount of gratuity
payable to the appellant. Clause (b) of Sub-section (6) of Section 4 of the Act
also provides for forfeiture of the whole amount of gratuity or part in the
event his services had been terminated for his riotous or disorderly conduct or
any other act of violence on his part or if he has been convicted for an
offence involving moral turpitude. Conditions laid down therein are also not
satisfied.
Termination
of services for any of the causes enumerated in Sub- section (6) of Section 4
of the Act, therefore, is imperative.
In Balbir
Kaur and Another v. Steel Authority of India Ltd. and Another [(2000) 6 SCC
493], this Court opined:
"...As
regards the provisions of the Payment of Gratuity Act, 1972 (as amended from
time to time) it is no longer in the realm of charity but a statutory right
provided in favour of the employee..." Interpreting Section 4(1) of the
Act, it was held:
"...We
shall come back to the deposit of the provident fund but as regards the
gratuity amount, be it noted that there is a mandate of the statute that
gratuity is to be paid to the employee on his retirement or to his dependants
in the event of his early death the introduction of the Family Pension Scheme
by which the employee is compelled to deposit the gratuity amount, as a matter
of fact runs counter to this beneficial piece of legislation (Act of 1972). The
statutory mandate is unequivocal and unambiguous in nature and runs to the
effect that the gratuity is payable to the heirs of the nominees of the
employees concerned but by the introduction of the Family Pension Scheme, this
mandate stands violated and as such the same cannot but be termed to be illegal
in nature. We do find some substance in the contention as raised, a mandatory
statutory obligation cannot be trifled with by adaptation of a method which
runs counter to the statute. It does not take long to appreciate the purpose
for which this particular Family Pension Scheme has been introduced by deposit
of the provident fund and the gratuity amount and we are not expressing any
opinion in regard thereto but the fact remains that statutory obligation cannot
be left high and dry on the whims of the employer irrespective of the factum of
the employer being an authority within the meaning of Article 12 or not."
We may notice that this Court in Bhagirathi Jena v. Board of Directors,
O.S.F.C. & Ors. [(1999) 3 SCC 666] was concerned with interpretation of
Regulation 17 of the Orissa State Financial Corporation Employees' Provident
Fund Regulations, 1959. This Court noticed the relevant Regulations and opined
that therein no specific provision existed for deducting any amount from the
provident fund consequent to any misconduct determined in departmental enquiry,
nor was there any provision for continuance of departmental enquiry after
superannuation. It was in the aforementioned situation opined :
"In
view of the absence of such a provision in the abovesaid regulations, it must
be held that the Corporation had no legal authority to make any reduction in
the retiral benefits of the appellant.
There
is also no provision for conducting a disciplinary enquiry after retirement of
the appellant and nor any provision stating that in case misconduct is
established, a deduction could be made from retiral benefits. Once the
appellant had retired from service on 30-6-1995, there was no authority vested in
the Corporation for continuing the departmental enquiry even for the purpose of
imposing any reduction in the retiral benefits payable to the appellant. In the
absence of such an authority, it must be held that the enquiry had lapsed and
the appellant was entitled to full retiral benefits on retirement." These
aspects of the matter although have been considered by the authority under the
Act as also the appellate authority wherewith the learned Single Judge agreed,
the Division Bench posed unto itself a wrong question and, thus, misdirected
itself while passing the impugned judgment. The controlling authority was
exercising a power under a statute and, therefore, it having been authorised to
administer the provisions of the Act was entitled to determine as to whether
any case has been made out to deny the right of the appellant to obtain the
amount of gratuity in accordance with the provisions thereof. He, thus, did not
exceed his jurisdiction.
Reliance
has been placed by Mr. Rana Mukherjee, learned counsel appearing on behalf of
Respondent No. 1 on Management of Tournamulla Estate v. Workmen [1973 (3) SCR
762]. In that case, this Court was concerned with a scheme of gratuity. The
scheme contained a provision which was in pari materia with Section 4(6)(b) of
the Act. The said scheme was upheld stating:
"Although
the provisions of this statute would not govern the decision of the present
case, the importance of the enactment lies in the fact that the principle which
was laid down in the Delhi Cloth Mills case with regard to forfeiture of
gratuity in the event of commission of gross misconduct of the nature mentioned
above, has been incorporated in the statute itself. Even otherwise, such a rule
is conducive to industrial harmony and is in consonance with public
policy." Reliance has also been placed upon a decision of Karnataka High
Court in M/s. Bharath Gold Mines Ltd. v. The Regional Labour Commissioner
(Central), Bangalore and others [1986 Lab. I.C. 1976].
In that case it was held that before the amount of gratuity can be directed to
be forfeited, an opportunity of hearing must be given. The said decision may
not have any application to the fact of the present case as opportunity of
hearing was given both to the employer as also the employee by the authority.
Reliance
placed by Mr. Mukherjee on a decision of this Court in D.V. Kapoor v. Union of
India and Others [(1990) 4 SCC 314] is misplaced.
Therein
having regard to the provisions of the Civil Services and Conduct Rules, it was
held that a departmental proceeding can be continued even after allowing the
delinquent employee to voluntarily retire. However, therein the rules provided
for withholding or withdrawing pension permanently. In that case itself, it was
opined:
"...The
right to gratuity is also a statutory right.
The
appellant was not charged with nor was given an opportunity that his gratuity
would be withheld as a measure of punishment. No provision of law has been
brought to our notice under which, the President is empowered to withhold
gratuity as well, after his retirement as a measure of punishment. Therefore,
the order to withhold the gratuity as a measure of penalty is obviously illegal
and is devoid of jurisdiction." The said decision, thus, was rendered
having regard to the rule which was in operation.
For
the reasons aforementioned, the impugned judgment cannot be sustained which is
set aside accordingly. The appeal is allowed. The appellant shall also be
entitled to costs. The counsel's fee assessed at Rs. 25,000/-.
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