Mathew K.C. Vs Plantation Corporation of Kerala Ltd. and Another

Pasayat, C.J.@mdashThe only question which needs adjudication in this writ appeal is whether the direction for recovery of loss allegedly sustained on account of appellant''s conduct was imposed by way of punishment as contended by appellant, or as a mode of adjustment/recovery in respect of the loss sustained by it on account of his conduct as contended by the Plantation Corporation of Kerala Limited (hereinafter referred to as ''the Corporation''). Learned single Judge by the impugned judgment held that it was not in reality an order of punishment but was only a direction to recover the loss sustained by the Corporation.

2. Factual position needs to be noted in brief: Appellant was functioning as the Administrative Officer of the Corporation. Proceedings were initiated against him for alleged misconduct and irregularities. One of the allegations was that he caused huge loss to the Corporation by several acts of omissions and commissions. An enquiry was conducted in the matter. After receiving the enquiry report a notice was issued to the appellant to show cause as to why action shall not be taken against him for recovery. However, it was noted that since the appellant was at the fag end of his career, it was decided not to award any punishment as provided in the Plantation Corporation of Kerala Limited Service Rules for Officers, 1973 (in short ''the Rules''). Appellant was allowed to superannuate on reaching the age of superannuation. In the enquiry it was found that appellant was responsible for loss to the Corporation to the tune of about Rs. 19.77 lakhs. He was directed to show cause why the said amount shall not be recovered from him. Explanation submitted was not found acceptable and the impugned order annexed as Ext. P-16 to the original petition was passed, which was challenged in the original petition. By the said order, inter alia recovery was directed.

3. Stand of the appellant was that recovery from gratuity payable to him is not a punishment which is enumerated under the Rules, and therefore there was no scope for recovering the amount in the departmental proceedings. Corporation took the stand that the order passed was not one which is connected with any punishment. It was in fact an order directing to recover the loss sustained to the Corporation on account of misconduct/irregularities committed by the appellant. In fact the charge itself was that huge loss was caused to the Corporation by the irregularities of the appellant. Enquiry was conducted and finding has been recorded about the loss having been incurred on account of appellant''s lapses. Amount was also quantified. The show cause notice itself indicated that the Corporation did not want to impose any punishment because appellant had almost reached superannuation age. What was sought to be recovered was the liability fixed. Since the amount of gratuity was available with the Corporation, same was adjusted towards the liability.

4. As noted above learned single Judge did not find any substance in the plea of the appellant and rejected the original petition. Respective stands of the contesting parties before learned single Judge were reiterated in this writ appeal.

5. Rule 19 of the Rules provides punishments that can be imposed and the same reads as follows:

"Rule 19. Punishments: An officer can be punished either by censure, stoppage of increments, suspension, reduction in rank, discharge or dismissal by the Managing Director for a misconduct proved against him."

Obviously recovering any amount in respect of loss sustained by the Corporation is not one of the punishments provided for.

6. As was observed by the Apex Court in Glaxo Laboratories (I) Ltd. Vs. Presiding Officer, Labour Court, Meerut and Others, some misconduct neither defined nor enumerated and which may be believed by the employer to be misconduct ex post facto would expose the workman to a penalty. It cannot be left to the vagaries of management to say ex post facto that some acts of omission or commission nowhere found to be enumerated in the relevant standing order is nonetheless a misconduct not strictly falling within the enumerated categories of misconduct, but yet a misconduct for the purpose of imposing a penalty. A bare reading of Rule 19 of the Rules would go to show that recovery of any amount for alleged loss sustained by the Corporation is not one of the penalties imposable. Learned single Judge was therefore justified in holding that the order was not one of punishment.

7. In A.L. Kalra Vs. Project and Equipment Corporation of India Ltd., the view expressed in Glaxo Laboratories case (supra) was reiterated and it was observed that what in a given context would constitute conduct unbecoming of a public servant to be treated as misconduct would expose a grey area not amenable to objective evaluation. Where misconduct when proved entails penal consequences, it is obligatory on the employer to specify and if necessary define it with precision and accuracy so that any ex post facto interpretation of some incident may not be camouflaged as misconduct.

8. Learned Counsel for the Corporation brought to our notice Section 4 of the Payment of Gratuity Act, 1972 (in short ''the Act'') which permits forfeiture of gratuity payable. Section 4 insofar as relevant reads as follows:

"Section 4: Payment of gratuity.-

(1) Gratuity shall be payable to an employee on the termination of his employment after he has rendered continuous service for not less than five years:

(a) on his superannuation, or

(b) on his retirement or resignation, or

(c) on his death or disablement due to accident or disease;

Provided that the completion of continuous service of five years shall not be necessary where the termination of the employment of any employee is due to death or disablement:

Provided further that in the case of death of the employee, gratuity payable to him shall be paid to his nominee or, if no nomination has been made, to his heirs, and where any such nominees or heirs is a minor, the share of such minor, shall be deposited with the controlling authority who shall invest the same for the benefit of such minor in such bank or other financial institution has, as may be prescribed, until such minor attains majority, if no nomination has been made, to his heirs.

Explanation.- For the purpose of this section, disablement means such disablement as incapacities an employee for the work which he was capable of performing before the accident or disease resulting in such disablement.

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(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 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."

Sub-sections (1) and (6) of Section 4 when read together lead to only one conclusion, i.e. forfeiture to the extent of the damage or loss caused can be done where services of an employee have been terminated for any act, wilful omission or negligence causing any damage or loss or destruction of property belonging to the employer. It is admitted that appellant''s services were not terminated. The stand of learned Counsel for the Corporation is that misconduct was of such magnitude for termination of services could have been directed, but taking note of the fact that only few days were left for his superannuation, such a course was not adopted and for taking a sympathetic view the Corporation may not suffer.

9. Though it is possible that an order of termination could have been passed as contended by learned Counsel for the Corporation, on an hypothetical basis, yet in reality no order of termination was passed. That being the position, Sub-section (6) of Section 4 of the Act does not come to the aid of the Corporation.

10. The right to gratuity is a statutory right and it cannot be withheld under any circumstance, other than those enumerated in Sub-section (6) of Section 4. "Gratuity" as the term itself suggests is a gratuitous payment given to an employee on retirement or discharge. This is in addition to other retrial benefits payable to the employee. Purpose of enactment of the Act was to confer extra benefits on the employees. As was observed in Burhanpur Tapti Mills Ltd. Vs. Burhanpur Tapti Mills Mazdoor Sangh, gratuity is a lump sum payment considered necessary for an orderly and humane elimination from industry of superannuated or disabled employees who but for such retiring benefits would continue in employment even though they function inefficiently.

11. In D.S. Nakara and Others Vs. Union of India (UOI), in the context of pension it was held that gratuity is a social welfare measure rendering socio-economic justice by providing economic security in the fall of life when physical and mental process is ebbing corresponding to ageing process and, therefore, one is required to fall back on savings. Such payment cannot be withheld unless specifically permitted by any statutory provision.

12. We are therefore of the considered view that the direction to withhold the amount was not permissible. However, it is brought to our notice that a civil suit has been filed for recovery of the amount and an application shall be filed for retention of the amount payable as "gratuity". We do not think it necessary to express any opinion in that regard as the concerned Court can pass necessary orders if an application in that regard is filed by the Corporation.

13. Writ appeal is allowed to the extent indicated above.