Madura Coats (P.) Ltd. vs M. Ramesh Babu and Others

K.L. Manjunath, J.—The concurrent findings of the Controlling Authority and the Assistant Labour Commissioner under the provisions of the Payment of the Gratuity Act, 1972, which has been confirmed by the Appellate Authority and the Regional Labour Commissioner, Bangalore and further affirmed by the learned Single Judge in W.P. No. 14369/2009, dated 28.7.2009 are called in question in this intra-Court appeal.

Heard Shri S.N. Murthy, learned Senior Counsel, appearing for the appellant and the learned Counsel for the first respondent.

The first respondent was working under the appellant company. He joined the company in the year 1977. He was promoted from time to time. While he was working as a Exports Manager, it was alleged by the appellant that the first respondent by misusing his post sold DEPB licences worth Rs. 54,00,000/- for his personal gain and also sold about 23 other licences for Rs. 52,32,822/- without prior approval of his Superiors and having realized the amount by selling licences the amount was not remitted to the appellants company''s account. Therefore, he was dismissed from the services by forfeiting the gratuity payable to him.

Aggrieved by the denial of payment of gratuity the first respondent made an application before the second respondent-controlling authority to determine the gratuity payable to him and direct the appellant company to pay the same. The appellant filed a detailed objection before the controlling authority. The controlling authority came to the conclusion that an enquiry is required to be held under the Law to determine the loss. Accordingly, the appellant was directed to pay gratuity in a sum of Rs. 3,50,000/-, with interest at 10% per annum to be calculated from 16.3.2005. The order of the controlling authority was challenged by the appellant by filing an appeal before the appellate authority.

The third respondent-appellate authority also came to the conclusion that without their (sic there) being an enquiry conducted by the appellant against the respondent, the appellant could not have denied the payment of gratuity. Accordingly, the appeal came to be dismissed. Challenging the concurrent findings of the controlling authority and the appellate authority, the writ petition came to be filed.

The learned Single Judge after hearing the parties also came to the conclusion that an enquiry was required to be held by the management before passing an order of forfeiture, accordingly the writ petition came to be disposed off by giving liberty to the appellant to initiate action against the and respondent No. 1 and determine whether the respondent No. 1 is entitled for gratuity or not. This order is called in question in this appeal.

The bone of contention of Shri S.N. Murthy, learned Senior Counsel appearing for the appellant is that when the parties have led-in evidence before the appellate authority, the appellate authority was required to consider the evidence let-in by the parties and find out whether the order of forfeiture is justified or not. According to him there was no necessity for the learned Single Judge in directing the appellant to hold an enquiry afresh. To support his arguments he has relied upon the judgment of the Hon''ble Supreme Court in the case of The Workmen of Firestone Tyre and Rubber Co. of India (Pvt.) Ltd. Vs. The Management and Others, .

The learned Counsel for the respondent submits that the judgment relied upon by the learned Counsel for the appellant has no application to the facts of the case. Because the scope of enquiry u/s 11A of the Industrial Disputes Act is altogether different from the scope of enquiry to be conducted under the Payment of Gratuity Act. According to him, the scope of enquiry of the appellate authority under the Payment of Gratuity Act is a very limited and what is required to be considered by the appellate authority is whether an enquiry was conducted in order to hold that the first respondent is not entitled for payment of gratuity. Therefore, he requests the Court to dismiss the appeal.

Having heard the Counsel for the parties, we are of the view that no error is committed by the learned Single Judge in holding that the appellant has to hold an enquiry before denying the gratuity payable to the first respondent for the following reasons:

Admittedly, in case of misappropriation by the workmen it is for the Disciplinary Authority to hold an enquiry in order to find out the misappropriation and punish him in accordance with law. Without holding an enquiry and without there being a report in regard to the extent of misappropriation committed by the first respondent, the appellant cannot forfeit the gratuity payable to him. The enquiry to be conducted by the controlling authority or the appellate authority is only to find out whether the order of forfeiture is well within the provisions of the Payment of Gratuity Act, 1972.

If the employer has not conducted an enquiry in order to find out the misappropriation said to have been committed by the first respondent, it is not the concern of the controlling authority or the appellate authority under the Payment of Gratuity Act to find out whether the first respondent employer has committed misappropriation or not. The scope of enquiry under section-11A of Industrial Disputes Act is entirely different. Even if there was an enquiry conducted by the Management it is for the Labour Court to find out whether the enquiry conducted by the Disciplinary Authority-Management is in accordance with law or not and whether such enquiry is fan or proper, if the enquiry conducted by the Disciplinary Authority-management is found to be not proper, then the liberty would be granted to the parties to let-in fresh evidence and based on the same, the dispute would be considered by the Labour Court on merits and in accordance with the law.

The Labour Court is presided by a District Judge. The controlling authority or the appellate authority under the payment of gratuity are not the judges appointed by any Court, they are officers functioning only quasi-judicial function. The scope of enquiry under the Payment of Gratuity Act is very limited in order to ascertain whether the enquiry is conducted by the management before forfeiting gratuity or not. When the controlling or appellate authority have come to the conclusion no enquiry has been conducted by the management, it is justified in holding that the denial of gratuity to the first respondent as bad in law. In the present case, the learned Single Judge having noticed such a material defect in the order of the management; has directed the appellant-management to hold an enquiry and take action in accordance with the law. When such liberty is granted we are of the view that no error is committed by the learned Single Judge in disposing the writ petition. Accordingly, the present appeal is dismissed. It is open for the appellant to conduct an enquiry and take action in accordance with Law.