Ahsanul Haq vs Punjab Financial Corporation and Others

Satish Kumar Mittal, J.—The Petitioner, who was working as Assistant General Manager in Punjab Financial Corporation (hereinafter referred to as the Respondent Corporation), has filed the instat petition under Article 226 of the Constitution of India for quashing the order dated 10th August, 2007 (Annexure P--1) passed by Respondent No. 1 imposing the penalty of forfeiture of gratuity and leave encashment; as well as the order, dated 1st September, 2008 (Annexure P-21), whereby the appeal filed by the Petitioner against the said order, has been dismissed.

In the present case, the Petitioner joined the services of the Respondent Corparation as Assistant Manager (Finance) in the year 1986. Subsequently due to his hard work, the Petitioner was promoted as Assistant General Manager. After completion of 20 years of service, on 20th April, 2007 the Petitioner tendered his resignation to the rerspondent Corporation under the Voluntary Retirement Scheme as adopted by it and requested to relieve him from the services of the Respondent Corporation by waiving the requirement of three months'' notice. In the meantime, an anonymous complaint was made against the Petitioner alleging therein that he was doing some private business and had gone out of India without prior permission. On the said complaint, the comments of the Petitioner were sought, which were sent by him on 8th May, 2007. Thereafter, the request of the Petitioner for voluntary retirement under the Voluntary Retirement Scheme was accepted by the Respondent Corporation, but his prayer for waiver of three months'' notice period was not accepted. Consequently, in lieu of three months'' notice period, the Petitioner deposited Rs. 80,100 with the Respondent-Corporation on 18th May, 2007. Thereupon, the Petitioner was relieved from the services of the Respondent Corporation,--vide office order, dated 21st May, 2007 with effect from the same date.

After near-about three months of the voluntary retirement of the Petitioner, the Respondent Corporation,--vide its office order, dated 10th August, 2007 imposed a penalty of forfeiting of the gratuity and leave encashment of the Petitioner without giving him any opportunity of hearing or issuing any charge-sheet or holding any enquiry. Even before imposing the said penalty, no show cause notice was issued to the Petitioner. The said penalty was imposed on account of visiting the Petitioner abroad without prior permission of the Respondent Corporation.

Against the above-said order, the Petitioner filed an appeal and finally the said appeal was dismissed by the Executive Committee without providing an opportunity of hearing to the Petitioner and passed a totally non-speaking order. The said appellate order was quashed by this Court in a writ petition (CWP No. 6192 of 2008) filed by the Petitioner,--vide order, dated July 4, 2008, and remanded the matter back to the Executive Committee of the Respondent Corporation to decide the appeal filed by the Petitioner by passing a reasoned speaking order. In pursuance of the said order, the Petitioner was heard. The Executive committee,--vide order, dated 1st September, 2008 again rejected the appeal filed by the Petitioner.

The Petitioner has challenged the above-said orders in this petition on the grounds that (a) once the Petitioner was permitted to voluntary retirement from the services of the Respondent Corporation under the Voluntary Retirement Scheme, which could have been denied to an employee on account of contemplation or pendency of disciplinary proceedings against an employee, then after retirement, no departmental proceedings could have been initiated against him; (b) that the penalty of forfeiture of gratuity and leave encashment imposed by the Respondent Corporation upon the Petitioner does not fall under any penalty prescribed in the Punjab Financial Corporation (Staff) Regulations, 1961 (hereinafter referred to as ''the Staff Regulations, 1961''); (c) that before passing the impugned order of penalty, neither any charge-sheet was issued nor any enquiry was held. Even before imposing the penalty, no show cause notice was issued; and (d) that under the Punjab Financial Corporation (Payment of Gratuity to Employees) Regulations (hereinafter referred to as ''the Payment of Gratuity to Employees Regulations''), the gratuity and leave encashment of the Petitioner could not have been forfeited particularly after his voluntary retirement until and unless any loss was caused by an employee to the Respondent Corporation. In the instant case, no loss was caused by the Petitioner while going abroad without prior permission/intimation to the Respondent Corporation, thus, it is alleged that the penalty of forfeiture of leave encashment and gratuity is wholly arbitrary, unjustified, without jurisdiction and contrary to the provision of Staff Regulations, 1961.

In the written statement filed by the Respondents, while controverting the aforesaid grounds, it has been stated that the Respondent Corporation came to know about the alleged misconduct after the acceptance of the request of the Petitioner for voluntary retirement. It has been stated that had the Petitioner remained in service, he could have been dismissed from service for the said misconduct, and which could have resulted into forfeiture of his gratuity and leave encashment under the Payment of Gratuity to Employees Regulations. Though it has not been disputed that the Petitioner went to Jakarta without prior permission of the Respondent Corporation after submitting his resignation and when he was on casual leave from 30th April, 2007 to 4th May, 2007.

I have heard the counsel for the parties.

It is admitted position that the Petitioner had completed twenty years of service in the Respondent Corporation when on 20th April, 2007 he had tendered his resignation under Voluntary Retirement Scheme, as adopted by it, Clause 39(7) of the Voluntary Retirement Schemce reads as under:

A notice of voluntary retirement, given after completion of 20 years qualifying service will require acceptance by the appropriate authority if the date of retirement, on the expiry of the notice would be earlier than the date on which the government employee concerned could have retired voluntarily under the existing provisions of the rules ibid, such acceptance may be generally given in all cases except those (a) in which disciplinary proceedings are pending or contemplated against the Government employees concerned for the imposition of a major penalty and the disciplinary authority, having regard to the circumstances of the case, is of the view that the imposition of the penalty of removal or dismissal from service would be warranted in the case; or (b) in which prosecution is contemplated or may have been launched in a Court of law against the Government employee concerned. If it is proposed to accept notice of voluntary retirement even in such cases, approval of the Minister-in-charge should be obtained in regard to class I and class II Government employees and that of the Head of Department in cases of class III and class IV Government employees. Even where the notice of voluntary retirement by a Government employee requires acceptance by the appropriate authority, the Government employee giving notice may presume acceptance and the retirement shall be effective in terms of the notice unless the competent uthority issues an order to the contrary before the expiry of the period of notice.

According to this Clause, the Respondent Corporation could have refused to accept the request of the Petitioner for voluntary retirement in case any disciplinary proceedings were pending or contemplated against him for imposing a major penalty in which the Disciplinary Authority was of the view that the imposition of penalty of removal or dismissal of service would be warranted or where any prosecution is contemplated or may have been launched in a Court of law. In the instant case, neither there was any disciplinary proceeding for imposing the major penalty was pending against the Petitioner nor any criminal prosecution was contemplated or pending against him in a Court of law on the date when the request of the Petitioner for voluntary retirement was accepted. From the written statement, it is also clear that on the date of acceptance of the request of the Petitioner for voluntary retirement, even no disciplinary proceedings were contemplated. Only an anonymous complaint was received alleging that the Petitioner was doing his private business and had gone abroad without prior permission of the Respondent Corporation. A reply was sought from the Petitioner which was given by him on the next date, and thereafter, no disciplinary proceedings were contemplated or initiated against the Petitioner . Rather,--vide letter, dated 16th May, 2007 (Annexure P-14) the request of the Petitioner for voluntary retirement was accepted. However, his prayer for waiving of three months'' notice period was declined. Thereupon, the Petitioner deposited an amount of Rs. 80,100 with the Respondent-Corporation on 18th May, 2007, and he was relieved from the services of the Respondent-Corporation on 21st May, 2007. Thus, the stand taken by the Respondent Corporation that it was not aware about the misconduct of the Petitioner before acceptance of his prayer for voluntary retirement, is incorrect and contrary to the material available on the record. Thus, in my opinion, after acceptance of the request for voluntary retirement of the Petitioner, the Respondent Corporation could not have initiated the disciplinary proceedings and imposed the impugned penalty of forfeiture of the leave encashment and gratuity of the Petitioner.

Undisputedly, the services of the Petitioner were governed by the Staff Regulations. Regulation 41 of the Staff Regulations which reads as under, provides for imposition of penalty on an employee:

Penalties 41 (1)--Without prejudice to the provisions of other regulations, an employee, who commits a breach of the regulations of the Corporation, or who displays negligence, inefficiency or indolence, or who knowingly does anything detrimental to the interests or prestige of the Corporation, or in conflict with its instructions, or who commits a breach of discipline or is guilty of any other act of misconduct, or misbehaviour, shall be liable to the following penalties:-

(a) Reprimand;

(b) Delay or stoppage of increment or promotion;

(c) Degradation to a lower post or grade or to a lower stage in his incremental scale;

(d) Recovery from pay of the whole or part of any pecuniary loss caused to the Corporation by the employee;

(e) Removal or dismissal.

41(2)--No employee shall after the enforcement of these regulations, be subjected to the penalties (b), (c), (d) or (e) of Sub-regulation (1), except by an order in writing and given to the said employee so that he shall have reasonable opportunity to answer them in writing or in person, as he prefers and in the latter case, his defence shall be taken down in written, and read to him.

PROVIDED that the requirements of this sub-regulation may be waived if the facts on the basis of which action is to be taken, have been established in a court of law or court martial or where the employee has absconded or when it is for any other reason impracticable to communicate with him or where there is difficulty in observing them and the requirements can be waived without injustice to the employee. In every case, where all or any of the requirements of this sub-regulation are waived, the reason for doing so, shall be recorded in writing.

41(3)--The Managing Director may delegate the conduct of any enquiry against an employee required under Sub-regulation (2), to such officer or officers of the corporation as he may nominate in writing in that behalf.

A reading of Clause (1) of Regulation 41 makes it clear that for the misconduct of an employee, five penalties prescribed in subclauses (a), (b), (c), (d) and (e) can be imposed. Under these subclauses, there is no provision for imposing the penalty of forfeiture of gratuity or leave encashment of the employee. Only under Sub-clause (d) a recovery can be ordered against an employee, who has caused pecuniary loss to the Respondent Corporation. Admittedly, in the instant case while visiting abroad without permission, the Petitioner did not cause any loss to the Respondent Corporation. Therefore, under Regulation 41(1), the penalty of forfeiture of leave encashment and gratuity could not have been imposed by the Respondent Corporation on the Petitioner. Further Sub-clause (2) of Regulation 41 provides that no penalty as prescribed in Sub-clause (1) of Regulation 41 could have been imposed without the charge sheet being formulated in writing and issued to the delinquent employee, and thereafter, the employee is given fair opportunity to answer those allegations and in case the reply is not found satisfactory, then the enquiry has to be held. The Proviso to the said sub-clause empowers the Disciplinary Authority to waive the requirement of this sub-regulation if the facts on the basis of which action is to be taken, have been established in a court of law or court martial or where the employee has absconded or when it is for any other reason impracticable to communicate with him or where there is difficulty in observing them. But in the instant case, concededly, before imposing the impugned penalty, neither any charge sheet was issued nor any Enquiry Officer was appointed nor any enquiry was held. Even before imposing the penalty, no show cause notice was issued to the Petitioner. It is not the stand of the Respondent Corporation that the requirement of holding the enquiry was waived under sub-regulation (2). Thus, the imposition of the impugned penalty is totally arbitrary and against the principles of natural justice and also contrary'' to Regulation 41.

Further, as per Regulation 5 of Payment of Gratuity to Employees Regulations, an employee, who has completed ten years of service in the Respondent Corporation or has not been dismissed from service of the Corporation for any misconduct, is entitled for gratuity. As per this Regulation, the Petitioner is entitled for gratuity. Regulation 7 further provides that at the time of determining the gratuity payable to an employee, the employer can take into account any financial loss caused by the employee to the Corporation by reason of his inefficiency or misconduct and grant such employee the reduced amount of gratuity. In the instant case, concededly no loss was caused by the Petitioner to the Respondent Corporation by his alleged misconduct. Thus, even no amount could have been deducted from the gratuity of the Petitioner. A perusal of the impugned order, dated 5th September, 2008 shows that the Executive Committee while dismissing the appeal filed by the Petitioner, has not considered all the aspects and the legal submissions made by the Petitioner. During the course of hearing, learned Counsel for the Respondents could not legally justify the action of the Respondents for imposing the penalty of forfeiture of gratuity and leave encashment. From the record, it appears that after the acceptance of the voluntary retirement of the Petitioner , the impugned order of penalty was passed in a most illegal, arbitrary and whimsical manner, which has compelled the Petitioner to approach this Court.

In view of the above, the writ petition is allowed with costs, and the impugned orders, dated 10th August, 2007 (Annexure P1) and 1st September, 2008 (Annexure P21) are hereby quashed. The Respondent Corporation is directed to release the amount of gratuity and leave encashment with interest @ 9% to the Petitioner within a period of three months.

Costs are assessed at Rs. 10,000.