(1) THE petitioner is seeking a declaration that his employer, Indian Iron and Steel Company ltd. was not empowered and entitled to deduct the sum of Rs. 51,314 from his gratuity, He has prayed for a mandamus directing his employer to pay that amount with interest @ 10% per annum. He has also prayed for a mandamus directing his employer to pay allowance for travelling to his home after retirement.

(2) AT the time of retirement on June 30, 2003 he was working as senior Manager (Mining). A minor penalty disciplinary action was initiated against him by issuing charge-sheet dated June 23, 2003, He submitted his reply dated July 9, 2003. He denied the allegation that by showing favour to a party he had caused financial loss to his employer. By an order dated November 29, 2003, the disciplinary authority imposed the minor penalty

"of reduction of pay by one stage in his last pay drawn for a period of one year without cumulative effect"

(3) HE was occupying quarters allotted to him by his employer. Though according to rules and regulations of the company he was entitled to keep the quarters for two months after his retirement, he continued to occupy it till november 6, 2004, when he gave possession thereof to the company. In the circumstances, gratuity payable to him was paid on October 5, 2005 after deducting Rs. 3,600 by way of recovery of excess payment in terms of the minor penalty order, Rs. 16,320 on account of unpaid electricity consumption charges, and rs. 31,394 on account of house rent (normal and penal added together). Feeling aggrieved he took out this writ petition.

(4) HIS counsel argues that in view of provisions in Sections 1 (3), 4 (1), 5, 6, 7 (3), 13 and 14 of the Payment of Gratuity Act, 1972, the company was not empowered and entitled to deduct any amount from the gratuity. His, contention is that since no notification in terms of provisions in Section 1 (3) was issued exempting the company from the operation of the Act, it was bound to pay gratuity according to its provisions. In support of this he relies on calcutta Dock Labour Board and Another v. Smt. Sandhya Mitra and Others, AIR 1985 SC 996 : (1985) 2 SCC 1 : 1993-III-LLJ (Suppl)-412. On the strength of Travancore plywood Ind. Ltd. v. Regional Jt. Labour. Commr. and Others, 1996 LIC 1403 (Ker), mining and Allied Machinery Corporation v. Ram Ranjan Mukherjee and Others, 2004 (1)CHN 510 (DB), Rabindra Nath Banerjee v. Certificate Officer and Others, (2005) 1 Cal LT 525 (HC) and Jaswant Singh Gill v. Bharat coking Coal Ltd. and Others 2007-I-LLJ-795 (SC), he argues that since provisions of the payment of Gratuity, Act, 1972 were to prevail over the gratuity rules of the company, and since in terms of provisions of the Act nothing can be deducted from gratuity payable to an employee, by deducting the amount the company acted wrongfully and illegally, and hence it must pay it with interest, for which relies on H. Gangahanume Gowda v. Karnataka Agro Industries Corporation Ltd. AIR 2003 SC 1526 : (2003) 3 SCC 40 : 2003-I-LLJ-1119.

(5) COUNSEL for the company argues that in view of the rules in terms whereof gratuity was to be paid to the petitioner, the company was empowered and entitled not only to withhold payment of the amount for non-vacation of its accommodation, but it also had the right to deduct there from any amount payable to it. He says that the amount was rightly deducted, because, admittedly, the, petitioner did not vacate the quarters after his retirement. His argument is that the question whether in terms of the rules the company was empowered and entitled to deduct the amount from the gratuity is no longer res integra, because in a previous case involving the same question a Division bench of this Court held that the company would be entitled to deduct penal rent from the gratuity payable to an employee. He relies on the decision dated May 5. 2005 given in MAT no. 427 of 2005 Bhola Misra v. Union of India and Others. As to this, counsel for the petitioner says that the Division Bench having not considered the binding Division Bench decision in Mining and Allied Machinery corporation's case (supra), its decision, to be treated as per incuriam, cannot be considered a binding precedent. For this he relies on Shri sujan Banerjee and Others v. Union of India and Others 2001-I-LLJ-377 (Cal) and State of bihar v. Kalika Kuer @ Kalika Singh and others, AIR2003 SC 2443 : (2003) 5 SCC 448.

(6) ON the strength of the above-noted unreported Divisionbench decision of this court, and the decisions in Wazir Chand v. Union of India and Others, (2001) 6 SCC 596 : 2001-I-LLJ-603, Grid Corporation of Orissa and Others v. Rasananda Das, AIR 2003 SC 4599 : (2003) 10 SCC 297 : 2004-II-LLJ-1053, chhetrapal v. State of U. P. and Others, 2004 lic 1981 and Secretary, O. N. G. C. Ltd. and another v. Warrier, AIR 2005 SC 3039 : (2005)5 SCC 245 : 2005-II-LLJ-1040 and the gratuity rules of Steel Authority of India Ltd. , adopted by the company in 1979, counsel for the company submits that the company was fully empowered and entitled to deduct the amount in question from the amount of gratuity that was payable to the petitioner. His further submission is that the Division Bench decision of this Court in Mining and Allied Machinery corporation's case (supra) will not apply to the present case, since here the case is governed by the gratuity rules of the company, which was not the position in that case.

(7) THE first question for decision is whether the matter directly in issue in the present case is covered by any binding precedent. I am unable to agree with counsel for the parties that it is. In so far as the Division bench decision of this Court in Mining and Allied machinery Corporation's case (supra) is concerned, suffice it say that that cannot be considered a binding precedent to govern the question directly in issue in this case, since there their Lordships were not considering whether provisions of the Payment of Gratuity Act, 1972 would stand in the way of deduction, even when the gratuity rules of the company provided for deduction, from gratuity, of amounts payable to the company on any account including on account of normal and penal rent for withholding delivery of quarters by the employee concerned. From the decision it does not appear either whether in that case the question of deduction was governed by any gratuity rules of the company concerned,

(8) THE other unreported Division Bench decision of this Court in Bhola Misra 's case (supra) is not of any real assistance, since there the question just did not arise. There order was made saying that the company would be entitled to deduct penal rent from the retirement benefits of the employee concerned. I am therefore of the view that the authorities relied on by counsel for the petitioner in support of his contention that the Division Bench decision in bhola Misra's case (supra) cannot be treated as a precedent, it being per incuriam, having given without considering the existing Division bench decision, do not call for any discussion in detail. Not only this, I further say that the per incuriam rule will not apply to the decision that was given just on facts thereof without considering the question of law considered in the previous decision.

(9) THE question of exemption, not granted to the company, in my view, is irrelevant. True it is that it was held in Calcutta Dock Labour board's case (supra) that an establishment governed by the Payment of Gratuity Act, 1972 would remain so governed, unless notification exempting it from the operation of the Act was issued by the appropriate Government in exercise of powers conferred on it by provisions in Section 5 of the Act. There the question was whether an order could be made by the Civil court attaching the gratuity payable to an employee of the board. It was held that in view of provisions in Section 13 of the Act an order attaching the gratuity was not permissible. In my view, for deciding the question involved in this case that decision of the Apex Court is not of any assistance.

(10) THE single Bench decision in Rabindra nath Banerjee's case (supra) given in the context of provisions in the Sick Industrial companies (Special Provisions) Act, 1985. The question there was whether Section 14 of the Payment of Gratuity Act, 1972 and Section 22 of the Sick Industrial Companies (Special provisions) Act, 1985 were contradictory and conflicting in nature. Here the question for decision is absolutely different. In Jaswant singh Gill's case (supra) the question for decision was whether a statutory right accrued in favour of the employee to get gratuity in terms of provisions of the Payment of Gratuity Act, 1972 could be impaired by way of forfeiture in terms of provisions made in the discipline and appeal rules that had no statutory force. There in terms of provisions in Coal India executive's Conduct Discipline and Appeal rules, 1978 penalty of forfeiture of gratuity payable to the employee was imposed. And in that context it was held that no forfeiture of gratuity except in terms of provisions in Section 4 (6) of the Payment of Gratuity Act, 1972 was permissible. The question of forfeiture is not at issue in the present case.

(11) IT was held in Wazir Chand's case (supra) that the employee unauthorisedly occupying quarters of railway was liable to pay penal rent, and that the dues could be adjusted by the employer against the death-cum-retirement dues payable to the employee. I do not think that decision is of any assistance for deciding the question involved here. In Grid Corporation's case (supra), it was held by their Lordships of the Apex Court that it was permissible for the employer to recover penal rent from the retirement benefits of an employee of the corporation for withholding delivery of possession of the quarters after retirement. A question such as has arisen in the present case, was not considered in that case. In chhetrapal Singh's case (supra) a Division bench of the Allahabad High Court held that the employer would be entitled to deduct rent and penal rent from the retirement benefits including gratuity which were payable to the employee concerned.

(12) COUNSEL for the company has placed strong reliance on the decision in ONGCs case (supra). Relying on that he has argued that it was held by their Lordships of the Apex Court that in terms of rules of the corporation penal rent could be deducted from the amount of gratuity that was to be paid to the employee concerned. Here I find that the petitioner was governed by the gratuity rules, a copy whereof has been produced by the company, The rules, in para. 2. 2 provided: "these rules are applicable to all employees of the company except in so far as they may be inconsistent with the provisions of the Payment of Gratuity Act and Rules framed there under and the NJCS agreement. " Counsel for the petitioner has strongly relied on para 2. 2. His contention is that provisions of the rules, in para 3. 2. 1 (d), providing, the company will always have the right to deduct from the Gratuity payable and admissible under these rules to an employee, such amount as may be due from the employee," are clearly inconsistent with the provisions of the Payment of Gratuity Act, 1972, Sections 4 and 13.

(13) provisions in Section 4 (6) of the Payment of Gratuity Act, 1972 not only create a right of an employee to get gratuity on termination of his employment, but they also provide that gratuity payable for any part thereof shall not be forfeited unless the forfeiture is effected for any of the specific reasons mentioned therein. Provisions in section 13 on the other hand provide that gratuity payable to an employee will not be liable to attachment in execution of a decree or order of any Civil, Revenue or Criminal Court. The question is whether those provisions can be read, interpreted, and applied to support a proposition that even if the employer is entitled to get an amount, he is not empowered to deduct it from the gratuity payable to his employee. In support of his contention that an employer cannot, counsel for the petitioner has cited to me the single Bench decision of the Kerala high Court in Travancore Plywood Ind. Ltd. v. Regional Jt. Labour. Commr. and Others (supra).

(14) WITH great respect to His Lordship, I am unable to agree with him that in view of provisions in Sections 4 (6), 13 and 14 of the Payment of Gratuity Act, 1972 an employer cannot withhold payment of gratuity on the ground that the employee concerned failed to surrender his property (there it was land). The question in that case, however, was not whether the employer could deduct his dues from the gratuity payable to his employee under provisions of that Act. Putting such a prohibition against the employer's right, in my opinion, will simply amount to rewriting the legislation Itself. Forfeiture or attachment of the gratuity or a part thereof is not the same thing as deduction there from of an amount payable by the employee to his employer is. If it is said that because of provisions in Section 4 (6)deduction is a forbidden thing, then even for admitted dues, the employee, without making his employer contravene the provisions, will not be in a position to ask his employer to deduct the dues from his gratuity. I do not see any reason why the Court should see a prohibitory provision that the legislature never made.

(15) NOTHING prevented the legislature from putting a prohibition as visualized and contended by counsel for the petitioner. In the absence of an express prohibition against recovery of its dues by the company from the gratuity payable to the petitioner, I am unable to accept the case that it was not empowered to do that. The gratuity rules whereby the petitioner was governed are not in question. In terms thereof the company was empowered to deduct any amount due to it. I am unable to agree with counsel for the petitioner that the provisions conferring that right on the company are inconsistent with any provision of the Payment of Gratuity Act, 1972. This statute does not deal in any manner with the employer's right to deduct his dues from the gratuity payable to his employee.

(16) I, however, find some substance in the contention that the deduction should not have been effected unilaterally and without giving the petitioner any opportunity of expressing his views. The company has not produced any decision determining the dues payable by the petitioner. In my view, since the decision to deduct was bound to entail civil and evil consequences, as it actually did, the company was under an obligation to give the petitioner an opportunity of showing cause and hearing, that was not done. I am also of the view that the company should have examined the question of giving travelling allowance to the petitioner for undertaking the homeward journey after his retirement.

(17) FOR these reasons, while I hold that in terms of its gratuity rules the company was empowered and entitled to deduct its dues on all accounts from the gratuity payable to the petitioner, I dispose of the writ petition ordering that after giving the petitioner an opportunity of showing cause and hearing, a reasoned decision determining the dues shall be given by the competent authority who shall also decide the question of payment of travelling allowance. These directions shall be carried out within four weeks from the date of communication of this order.

(18) IF the petitioner is entitled to get any amount, then it shall be paid with interest @ 10% per annum, within four weeks from the date of the decision. It is further ordered that for delay in payment of gratuity the company shall pay interest on the amount of gratuity @ 10% per annum, if not already paid, for the period from November 6, 2004, (when possession of the quarters was given) to October 5, 2005 (when the gratuity was paid); payment on this account, if any, shall also be made within the period already mentioned. There shall be no order for costs in the case.

(19) URGENT certified xerox copy of this order shall be supplied to the parties, if applied for, within three days from the date of receipt of the file by the section concerned.