Fertilizers And Chemicals Travancore Limited v. Sebastian K. John

JUDGMENT

K. Vinod Chandran, J.

The short question that arises in the appeal is whether the appellant-Company, in whose employment the 1st respondent was, could recover from the gratuity; leave salary paid and salary in lieu of notice prescribed for resignation. On facts, suffice it to say that, the 1 respondent applied for long leave for the period 15.01.2003 to 14.04.2003 for the purpose of visiting his friends and relatives abroad, and then later applied for special leave for two years from 01.02.2003 to 31.01.2005 Admittedly the three months leave initially applied for was allowed by the Company. When subsequently special leave for two years was applied for, for the purpose of taking up employment in United Arab Emirates (UAE), the Company woke up to the fact that the 1 respondent had not complied with a circular applicable to the employees while undertaking foreign travel.

2. Since the conditions in the circular were alleged to have been not complied with, disciplinary proceedings were initiated and the 1 respondent was also directed to report for duty, failing which the disciplinary proceedings were to be continued ex parte. The 1 respondent did not report for work within the time stipulated, but sent a letter dated 18.02.2003, tendering his resignation.

3. The Company slept over the matter for three months and as is evident from Exhibit P1, communicated the acceptance of the resignation subject to settlement of dues, as per letter dated 19.05.2003, referred as item No. 2 in Exhibit P1. The rider was provided by Exhibit P1 in so far as determining the leave salary paid to the 1 respondent as also salary in lieu of the notice period; as amounts due to the Company. Recovery was also threatened from the gratuity payable.

4. The 1 respondent then approached the statutory authority, being the controlling authority under the Payment of Gratuity Act, 1972 (for brevity “Gratuity Act”), who declined the relief sought for by Exhibit P4. However on appeal, the appellate authority by Exhibit P7 held that the forfeiture of the gratuity by the management-Company was improper and directed to pay the balance amount with 10% interest for the period from 18.02.2003 This order was challenged by the appellant-Company in writ proceedings before this Court.

5. The learned counsel appearing for the Company before the learned Single Judge and also before us strenuously contended that the 1 respondent had acted in violation of the specific directions contained in the circular regarding foreign travel. It is also obvious that the 1 respondent had gone abroad in search of employment and on procuring the same, had sought for special leave and subsequently on not being granted such leave, tendered his resignation. The appellant, hence initiated disciplinary proceedings against the 1 respondent; but later took a lenient view and accepted his resignation. The leave salary paid as also the salary in lieu of notice period, according to the appellant-Company, are amounts due to the Company and the appellant is perfectly justified in adjusting the same from the gratuity amounts payable. The learned counsel would specifically point out that there was no forfeited gratuity as has been found by the appellate authority under the Gratuity Act.

6. We look at the Gratuity Act. Sub-section (6) of Section 4 reads as under:

“S.4(6) Notwithstanding anything contained in sub-section (1),-

(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 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”.

Section 13 protects gratuity from attachment and the said protection, in fact, clothes the amount of gratuity payable to an employee with a certain amount of immunity, subject, however, to sub-section (6) of Section 4. It is clear that gratuity can be forfeited if the services have been terminated for any act, wilful omission or negligence causing any damage or loss to the employer and extent of the damage or loss so caused could be the criteria for forfeiting amounts due as gratuity; of course only to the extent of such damages or loss. It is evident that in the instant case also the appellant-Company had initiated disciplinary proceedings, but thought it fit to discontinue it after waiting for almost three months from the date of receipt of the resignation letter.

7. We also have to notice that in any case the leave was sanctioned by the management-Company and even according to the appellant the leave was applied for showing the purpose as being visit to a foreign country. If any conditions were prescribed by the circular with respect to the appellant's employees travelling abroad, then it was for the management to scrutinise the leave application on the terms of such circular. Admittedly the leave was sanctioned and he was paid leave salary, which, obviously, he was entitled to at that point. It was on the request for special leave for taking up employment at UAE, the disciplinary proceedings were initiated. The 1 respondent was directed to join, and continuing the disciplinary proceedings ex parte was threatened. However, three months after receipt of the resignation the Company did not pursue the disciplinary proceedings and decided to accept the resignation. It was subsequent to the acceptance of the resignation that the 1 respondent was directed to produce an affidavit declaring his non-employment during the leave period and also directed to make payment of the salary in lieu of notice period. Though the appellant-Company had waited for three months before the resignation was accepted, that would not have enured to the benefit of the 1 respondent, since notice period definitely contemplates the employment of the employee within the said notice period.

8. The appellant-Company was justified in proceeding against the 1 respondent which, however, they chose not to pursue; despite having initiated disciplinary proceedings. The appellant-Company, after three months accepted the resignation and then came forward with the claim of leave salary and salary in lieu of notice and sought adjustment of the same from the gratuity amounts. We are afraid that the statutory provisions specifically prohibit such recovery of amounts from gratuity and the appellant-Company has not taken any steps to recover it in accordance with the provisions of the statute. Having conferred sympathetic considerations on its employee and having accepted the resignation, after dropping all disciplinary proceedings, the appellant-Company cannot be permitted to recover amounts from the 1 respondent, that too from the gratuity amounts, which has been declared to be immune from such recovery. We are of the opinion that the appellant-Company alone was responsible for the mishaps that occurred due to misplaced sympathies, and cannot invoke jurisdiction under Article 226 of the Constitution to make recoveries from gratuity, which is impermissible under law.

We find no ground to interfere with the judgment of the learned Single Judge and we dismiss the appeal, without costs.