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Judgment
Mr. K.M. Thaker, J. (Oral) - Heard Mr. Dave, learned advocate for the petitioner and Mr. Songara, learned advocate for the respondent.
In present petition the petitioner has prayed, inter alia, that:
"7(A) A writ of mandamus and/or a writ of certiorari and/or any other appropriate writ, order or direction be issued to quash and set aside the impugned orders dated 10.05.2011, 15.01.2013 and 21.02.2004 passed by respondent Nos. 2 and 3 and further be pleased to reject the application of respondent No.1.
(B) Pending the admission hearing and final disposal of the present petition, this Hon''ble Court may be pleased to restrain the respondent Nos. 2 and 3 to permit withdrawal of gratuity amount by respondent No.1 deposited by petitioner before the Controlling Authority;"
The petitioner is aggrieved by order dated 10.5.2011 passed by the Controlling Authority whereby the Controlling Authority condoned delay caused in filing Gratuity Claim Application. The petitioner is also aggrieved by order dated 15.1.2013 passed by the Controlling Authority whereby the Controlling Authority allowed the Gratuity Claim Application filed by present respondent. The Controlling Authority directed the petitioner, vide said order dated 15.1.2013 to pay Rs. 3,50,000/- to the claimant with interest at 10% from 1.7.2004. The Appellate authority rejected present petitioner''s Appeal against said order of Controlling Authority. The petitioner is aggrieved by order dated 21.2.2014 passed by the Appellate Authority.
So far factual background is concerned, it has emerged from the record and from the submissions by learned advocates for the petitioner and respondent that the original claimant i.e. respondent herein was working as Chief Manager with the petitioner electricity company.
3.1. It appears that the respondent No. 1 was arrested by Anti Corruption Bureau on the charge about commission of offence under the provision of Prevention of Corruption Act, 1988 (hereinafter referred to as the "Act") i.e. on the allegation that he demanded and accepted Rs. 20,000/- as illegal gratification.
3.2. Since the respondent No.1 was arrested on charge of commission of offence he was placed under suspension vide order dated 3.2.2003.
3.3. As per the record of the petitioner electricity company the respondent No.1 reached age of superannuation in June 2004. Therefore his service was terminated on attaining age of superannuation during pendency of the criminal case.
3.4. Subsequently learned trial Court passed judgment and order in July 2010 whereby learned trial Court convicted the respondent No.1.
3.5. In view of the conviction order the electricity company passed office order dated 31.8.2010 and declared that the period of suspension shall be treated as "period not spent on duty". Differently put, in view of the conviction for criminal offence, the respondent''s period of suspension is not regularized.
3.6. At this stage it is pertinent to mention that in September 2010 the petitioner company issued specific notice calling for explanation from the respondent No.1 as to why gratuity should not be forfeited.
3.7. In response to the said notice the respondent No.1 submitted his reply.
3.8. The petitioner company considered the reply and passed order dated 8.10.2010 whereby the petitioner electricity company forfeited gratuity.
3.9. Feeling aggrieved by the said order dated 8.10.2010 the respondent No.1 filed gratuity claim application before controlling authority with the request to condone delay.
3.10. The electricity company opposed both the applications i.e. claim application as well the as application seeking condonation of delay.
3.11. After considering the application the controlling authority allowed the application and condoned the delay vide order dated 10.5.2011. Having regard to the fact that it is an interlocutory order, the company did not challenge said order at that stage.
3.12. Thereafter the claim application was heard on merits. However, instead of passing final order on merits, the controlling authority closed the proceedings of gratuity claim application No. 363 of 2010 vide order dated 28.9.2011 on the ground that Hon''ble High Court has suspended sentence and a substantive appeal against judgment of trial Court is pending and that therefore final order in respect of claim for gratuity cannot be passed.
3.13. Feeling aggrieved by the said order dated 28.9.2011 the claimant preferred appeal before the appellate authority.
3.14. The appellate authority heard the parties and partly allowed the appeal by remanding case to the controlling authority to pass fresh order.
3.15. Subsequently the controlling authority allowed the gratuity claim application vide order dated 15.1.2013.
3.16. Feeling aggrieved by the said order the petitioner electricity company filed appeal before appellate authority.
3.17. The appellate authority heard the appeal and vide order dated 30.8.2013 rejected the appeal. Against the said order the petitioner company filed writ petition i.e. SCA No. 17318 of 2013.
3.18. This Court allowed the petition vide order dated 12.12.2013 and remanded the case to appellate authority on the ground that the appellate authority had passed nonspeaking and unreasoned order.
3.19. The appellate authority thereafter passed order dated 21.2.2014. The appellate authority rejected the appeal and also directed the petitioner company to pay interest at 10% w.e.f. 1.7.2004. Aggrieved by the said order the petitioner electricity company has taken out present petition.
Learned advocate for the petitioner electricity company assailed the orders passed by the controlling authority and appellate authority and submitted that the authorities have failed to appreciate relevant facts, more particularly the fact that the respondent No.1 is convicted and High Court has merely suspended the sentence but the conviction is not suspended and that therefore there was no justification to award gratuity to respondent No.1. He also submitted that the authorities ignored the fact that the claim application was filed after inordinate delay and that therefore the direction to pay interest is unjustified. According to the petitioner the direction to pay interest is even otherwise unjustified in view of the fact that the corporation has acted on the basis of the judgment by the learned trial Court. The learned Counsel for the petitioner also submitted that when the service of the respondent No. 1 is terminated in view of the fact that he was arrested and thereafter convicted on the ground of commission of criminal offence, the decision to forfeit gratuity is justified and that therefore the respondent No.1 could not be considered entitled for gratuity and award granting gratuity is unjustified. He urged that the order may be set aside.
4.1. The learned Counsel for the respondent No.1 vociferously supported the order passed by the controlling and appellate authorities. He submitted that the controlling authority and appellate authority have taken into account the fact that the respondent''s service is not terminated by way of action under Section 4(6) of the Payment of Gratuity Act, 1972 and that therefore gratuity cannot be forfeited. He submitted that the reason and ground in light of which the authorities have directed the petitioner to pay gratuity is correct and justified and the said orders are justified in the fact and on law and may not be disturbed.
I have heard learned advocates for the petitioner and respondent and I have also considered material available on record. I have also examined impugned orders passed by the controlling authority and appellate authority.
On reading impugned award and upon examination of the orders in light of the facts of the case it has emerged that the impugned orders, are for below mentioned reasons, not sustainable and the case deserves reconsideration by the controlling authority.
From the facts and circumstances of the case and from the submissions by learned advocates for the petitioner and respondent and from the impugned orders following pertinent facts have emerged:
The respondent No.1 was working with the petitioner electricity company as Chief Engineer.
Anti Corruption Bureau arrested the respondent No. 1 for alleged commission of offence under Prevention of Corruption Act and filed criminal case against respondent No.1 on the premise that the respondent demanded and accepted Rs. 20,000/- as illegal gratification.
Therefore the petitioner corporation placed respondent No. 1 under suspension.
When the respondent No. 1 reached to the age for superannuation, he came to be terminated from service pending the criminal case.
By order dated 31.7.2010 the Special Court, convicted respondent No. 1 and was sentenced to undergo imprisonment of three years and fine of Rs. 18,000/-, in default to undergo simple imprisonment of six months.
In view of the conviction order office order came to be passed treating the respondent No. 1''s suspension period as period not spent on duty.
The respondent No. 1 was issued show cause notice on 3.9.2010 inter alia calling upon him as to why gratuity should not be forfeited.
Being aggrieved by said order the respondent No. 1 approached controlling authority under the Act seeking payment of gratuity from the petitioner.
After couple of rounds of other proceedings (viz. appeal, petition, remand etc.) the appellate directed the petitioner to pay gratuity to the claimant with interest @ 10% from 1.7.2004.
In the backdrop of above-mentioned facts and in view of impugned orders, it is relevant and necessary to take into consideration the show cause notice for forfeiture of gratuity and the order of the competent authority. The relevant part of the notice dated 3.9.2010 reads thus:
"During your tenure as Chief Engineer at KLTPS, Panandhro, you were placed under suspension on account of criminal case filed against you by the Anti Corruption Bureau for the bribe of Rs. 20,000/- pending the result of the said criminal case vide order referred at (1) above. During the suspension period, your headquarter was fixed at Sikka TPS.
Thereafter the ACB had filed charge sheet before the Hon. Court vide Special Case No. 50/2003.
In the meantime you attained the age of superannuation and accordingly, your services were terminated from the erstwhile GEB w.e.f. 30.6.2004 vide order referred at (2) above. As per this order, you were eligible for all the terminal benefits till the date of your suspension i.e. 3.2.2003 except the payment of your gratuity and suspension period which was to be decided upon the final decision of the ACB case.
.....
Further, your proven criminal acts are involving moral turpitude and therefore, as per the provision of Clause No. 4(6) (b)(ii) of the Payment of Gratuity Act, 1972, your whole amount of Gratuity amounting to Rs. 3,50,000/- is liable to be forfeited.
You are therefore, directed to show cause within 15 days from the date of receipt of this notice as to why the whole amount of Gratuity amounting to Rs. 3,50,000/- should not be forfeited in light of the Hon. Court''s judgment delivered against you. On your failure to show cause within the stipulated time, it will be presumed that you do not wish to represent anything and ex parte decision shall be taken."
8.1. The relevant part of the order dated 8.10.2010 whereby the petitioner electricity company forfeited gratuity of respondent No. 1 reads thus:
"In the Special ACB case No. 50/2003, the Hon''ble Court, Bhuj has delivered the judgment dated 31.7.2010 and has found him guilty of having committed the criminal offence and has ordered the following sentences upon him.
Sentence under Clause No. 7, Prohibition of Corruption Act, 1988.
Rigorous imprisonment of three year and find of Rs. 9000/-.
Sentence under Clause No. 13 (1)(d), 13(2), Prohibition of Corruption Act, 1988.
Rigorous imprisonment of three year and find of Rs. 9000/-.
His proven criminal acts are involving moral turpitude and therefore, as per the provision of Clause No. 4(6)(b)(ii) of the Payment of Gratuity Act, 1972, his whole amount of Gratuity amounting to Rs. 3,50,000/- is liable to be forfeited. According the Show Cause Notice dated 3.9.10 proposing to forfeit was issued to him.
....
Apart from above, I am also of the views that:
1) Shri Z.R. Gala, while working as Chief Engineer (now retired) at KLTPS was looking after the work of Power Station. Therefore, the organization expected that his conduct should be an example for the subordinate staff working under him. Instead of this, he himself is found involved in serious proven misconduct of accepting bribe for his selfish purpose. Thus, he despite holding high, confidential, responsible and sensitive position, has committed serious misconduct, which has tarnished the image of the organization. He also breached the trust bestowed upon him by the organization.
2) The contentions raised by Shri Gala in his reply do not stand any scrutiny because looking to the above reasons and position, his request for not forfeiting the gratuity cannot be considered as he is not honourably acquitted by the higher court, but the Hon. High Court has simply suspended the sentence. This is the case where an officer is convicted by the court of law for corruption and therefore, such corrupt employee does not deserve to be allowed Gratuity as provided in the Act.
Therefore, after careful consideration of the case and reasons mentioned herein above, I decide to forfeit the whole amount of Gratuity amounting to Rs. 3,50,000/- in view of the Clause No. 4(6)(b)(ii) of the Payment of Gratuity Act, 1972.
Accordingly, I pass the following orders:
"The whole amount of his Gratuity amounting to Rs. 3,50,000/- is hereby forfeited under Clause No. 4(6)(b)(ii) of the Payment of Gratuity Act, 1972 since Shri Z.R. Gala, CE(now retired), KLTPS has committed act involving moral turpitude."
One of the important aspects of present case is that according to the respondent No.1 never challenged the order whereby the competent authority forfeited gratuity.
9.1. Learned advocate for the petitioner asserted that the respondent No.1 has not challenged said order.
9.2. However, learned advocate for the respondent No. 1 declared that he is not certain about said aspect and he does not have any instruction in this regard.
9.3. Therefore examination of factual aspects is necessary and said process can be undertaken by the adjudicating/appellate authority under the Act.
The authorities also ignored the fact that the claimant woke up after inordinate delay and that therefore the order with regard to interest could not have been passed mechanically without considering the delay caused by the claimant in initiating proceedings.
Now so far as the reason mentioned by the authorities in support of the decision to grant gratuity claim application with direction to the petitioner to pay gratuity to the claimant is concerned, it has emerged on perusal of the order that the authority proceeded on the premise that the employer has not taken action and/or not passed order under Section 4(6) of the Act therefore, the decision to forfeit gratuity is not sustainable.
11.1. However the controlling authority overlooked a vital fact that the claimant was arrested for alleged commission of offence involving moral turpitude and subsequently he came to be convicted by learned Trial Court for the offence for which he was charged.
11.2. Section 4(6) of the Act permits forfeiture of gratuity and the said section empowers employer to forfeit gratuity if the services of an employee have been terminated for any Act which constitutes offence and if such offence is committed in course of his employment.
11.3. In this context the material on record has brought out that the employer terminated services of the employee upon conviction by learned Trial Court for offence punishable under the provisions of the Act viz. demanding and accepting illegal gratification.
11.4. Before terminating service of the claimant on the aforesaid ground and for the said reason the employer complied principles of natural justice inasmuch as the show cause notice seeking reply and clarification from the claimant as to why gratuity should not be forfeited was also issued.
At this stage it is appropriate to recall the show-cause notice dated 3.9.2010 where under the claimant''s reply/explanation was called for. In the said show-cause notice the employer specifically mentioned that:
"During your tenure as Chief Engineer at KLTPS, Panandhro, you were placed under suspension on account of criminal case filed against you by the Anti Corruption Bureau for the bribe of Rs. 20,000/- pending the result of the said criminal case vide order referred at (1) above. During the suspension period, your headquarter was fixed at Sikka TPS."
(emphasis supplied)
12.1. Having mentioned that the claimant was allegedly involved in the offence of demanding and accepting bribe the employer also mentioned in the said notice that:
"Further, your proven criminal acts are involving moral turpitude and therefore, as per the provision of Clause No. 4(6) (b)(ii) of the Payment of Gratuity Act, 1972."
(emphasis supplied)
12.2. The above quoted details from the show-cause notice dated 3.9.2010 clearly bring out that the employer initiated the action and took the action under Section 4(6)(1)(b)(ii) of the Act which empowers the employer to forfeit gratuity in case where service of a employee is terminated for offence involving moral turpitude.
12.3. Now it is also appropriate to take into account he order dated 8.10.2010 passed by the competent authority. In the said order (whereby the employer forfeited claimant''s gratuity) it is categorically mentioned that:
"In the Special ACB case No. 50/2003, the Hon''ble Court, Bhuj has delivered the judgment dated 31.7.2010 and has found him guilty of having committed the criminal offence and has ordered the following sentences upon him.
Sentence under Clause No. 7, Prohibition of Corruption Act, 1988.
Rigorous imprisonment of three year and find of Rs. 9000/-.
Sentence under Clause No. 13 (1)(d), 13(2), Prohibition of Corruption Act, 1988.
Rigorous imprisonment of three year and find of Rs. 9000/-.
His proven criminal acts are involving moral turpitude and therefore, as per the provision of Clause No. 4(6)(b)(ii) of the Payment of Gratuity Act, 1972, his whole amount of Gratuity amounting to Rs. 3,50,000/- is liable to be forfeited. According the Show Cause Notice dated 3.9.10 proposing to forfeit was issued to him."
(emphasis supplied)
12.4. Having mentioned thus in the order the competent authority has also mentioned that:
"2) The contentions raised by Shri Gala in his reply do not stand any scrutiny because looking to the above reasons and position, his request for not forfeiting the gratuity cannot be considered as he is not honourably acquitted by the higher court, but the Hon. High Court has simply suspended the sentence. This is the case where an officer is convicted by the court of law for corruption and therefore, such corrupt employee does not deserve to be allowed Gratuity as provided in the Act.
Therefore, after careful consideration of the case and reasons mentioned herein above, I decide to forfeit the whole amount of Gratuity amounting to Rs. 3,50,000/- in view of the Clause No. 4(6)(b)(ii) of the Payment of Gratuity Act, 1972.
Accordingly, I pass the following orders:
"The whole amount of his Gratuity amounting to Rs. 3,50,000/- is hereby forfeited under Clause No. 4(6)(b)(ii) of the Payment of Gratuity Act, 1972 since Shri Z.R. Gala, CE(now retired), KLTPS has committed act involving moral turpitude."
(emphasis supplied)
12.5. The above-quoted details from the order dated 8.10.2010 and the details quoted from the notice dated 3.9.2010 actually leave no room for doubt with regard to the action taken by the employer. The employer terminated the service of the claimant on the ground that he is convicted for the offence punishable under the Act and after termination of his service on the said ground the employer initiated action for forfeiture of gratuity on the ground that the claimant is convicted for offence punishable under the Act. The show-cause notice as well as order categorically mentioned that the action is initiated under Section 4(16)(1) (6)(ii) of the Act.
12.6. The said aspects, which emerged from the notice and the order, make it crystal clear that the employer had taken action against claimant under Section 4(16)(1)(6)(ii) of the Act.
12.7. Unfortunately the authorities failed to take into account above discussed aspects. The said error on part of the authorities have rendered the orders unsustainable.
12.8. When the service of the employee is terminated upon conviction by the Court for an offence of demanding and accepting bribe by an employee in public sector undertaking, then it would tantamount to action taken under Section 4(6) of the Act and it cannot be construed that action is not taken under Section 4(6) of the Act.
12.9. The employer could have taken action in respect of the claimant''s conduct in accordance with the service regulations or the employer could wait for the verdict by the Court and take action on strength of the verdict by the Court. The action by either mode would fall within the purview of Section 4(6) of the Act.
12.10. However, the controlling authority and appellate authority misdirected themselves by proceeding on the premise that the employer had not taken action under Section 4(6) of the Act.
12.11. The termination of service upon conviction by the Court for offence involving moral turpitude would fall within the purview of Section 4(6) of the Act.
The authority, therefore, should reconsider the case and pass appropriate order by keeping in focus real purport and object of Section 4(6), more particularly Section 4 (6)(1)(b)(ii).
Since the authorities have failed to take into account above discussed aspects the orders passed by the controlling authority and appellate authority deserve to be set aside and the matter deserves to be remitted to the controlling authority for fresh order after considering relevant aspect.
14.1. Therefore impugned orders are set aside and following order is passed:
(A) The order dated 15.1.2013 passed by the controlling authority and the order dated 21.2.2014 passed by the appellate authority are set aside.
(B) The matter is remitted to the controlling authority for fresh consideration.
(C) The authority will conclude the proceedings and pass appropriate final order as expeditiously as possible and preferably within 8 weeks after receipt of the certified copy of this order.
(D) The authority will also take into account that according to the employer the appeal against judgment by the trial Court in criminal case is pending however, the conviction is not stayed, and merely the sentence is suspended. The employer shall place on record before the controlling authority a copy of the order passed by the High Court in Criminal Appeal wherein the appeal is admitted and sentence is suspended.
With the aforesaid clarification the petition is partly allowed.
Accordingly the petition stands disposed of. Rule is made absolute to the aforesaid extent.
Orders accordingly. No cost.