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Judgment
The petitioner in this writ petition is Mettur Spinning Mills, Mettur Dam, Salem District. The 3rd respondent was employed under the petitioner.
On 3rd October 1975, a charge memo was issued by the petitioner to the 3rd respondent. The gravemen of the charge was the 3rd respondent,
during the period from February 1975 to April 1975 obtained a certificate from the doctor attached to the Employees'' State Insurance Dispensary
at Mettur Dam that he was sick on a number of days and he got sickness benefits from the Employees'' State Insurance Corporation, and during
the same period, when the petitioner mills was under lay off, suppressing the above fact, he presented himself for work in the petitioner mills and
obtained lay off compensation. Admittedly there was no order of suspension of the 3rd respondent, pending enquiry into the above charge, passed
by the petitioner. It is stated on 10th January, 1975 the 3rd respondent wanted time to offer his explanation to the charge and he did not submit his
explanation. Nothing further seemed to have been done towards the prosecution of the disciplinary action until March 1976. On 4th February,
1976, the 3rd respondent wrote a letter to the petitioner resigning from his post. On 5th February, 1976, the petitioner informed the 3rd
respondent that his resignation cannot be accepted till the pending charges are cleared. On 7th February, 1976, the 3rd respondent addressed a
letter to the Labour Commissioner with a copy to the petitioner referring to his resignation and making a demand for settlement of his wages,
bonus, gratuity, etc. On 11th February, 1976, the 3rd respondent addressed a letter to the petitioner insisting that his resignation should be
accepted since he was not well and was under medical treatment, and further stating that he was not guilty of any misconduct. On 3rd March
1976, the 3rd respondent addressed a further letter to the petitioner enquiring about the acceptance of his resignation. On 16th March 1976, the
petitioner wrote to the 3rd respondent referring to the payment of bonus for the year 1975-76 and stated that it would be kept in abeyance till the
charges pending against the 3rd respondent are enquired into and orders passed thereon. On 18th March, 1976, the 3rd respondent wrote to the
petitioner referring to his previous letters, complaining about the non acceptance of his resignation, pleading his inability to continue in work and
demanding acceptance of his resignation and settlement of his gratuity and bonus. On 24th March, 1976, the enquiry into the charges was
conducted and the 3rd respondent was present in the enquiry and even though he admitted the charges levelled against him, he pleaded that his
resignation should be accepted and the loss, if any, suffered by the petitioner can be deducted from the gratuity amounts due to him and the
balance paid to him. On 3rd April, 1976, the petitioner wrote to the 3rd respondent calling upon him to come to the petitioner''s office on 5th
April, 1976 and to have his accounts settled. On 5th April, 1976, the 3rd respondent wrote to the petitioner stating that his health was not all right
and hence the amounts due to him may be sent by cheque. Obviously, finding no response from the petitioner, the 3rd respondent prosecuted an
application in Form-I as per the relevant rule under the payment of Gratuity Act (39 of 1972), hereinafter referred to as ''the Act''. In this form, the
3rd respondent has stated in the column relating to the date and cause of termination of services, that he resigned, that he resigned on 4th February
1976. The 3rd respondent followed this up by presenting the application dated 2nd May 1976 in Form-N as per the relevant rule under the Act to
the 2nd respondent and this application was received by the 2nd respondent on 4th May, 1976. On 8th May 1976, the petitioner, on the basis of
the finding rendered in the enquiry held on 24th March, 1976 and the report of the Enquiry Officer of even date, passed an order of dismissal of
the 3rd respondent from service. On the same date, namely 8th May, 1976 the petitioner presented an application to the Labour Officer, Salem,
under S. 33(2)(b) of the Industrial Disputes Act, 1947, for approval of the order of dismissal dated 8th May, 1976. The said Labour Officer, by
order dated 5th March, 1977, accorded approval to the action taken by the petitioner. After contest by the petitioner of the application presented
by the 3rd respondent, the 2nd respondent on an assessment of the materials placed before him, by order dated 30th August, 1977, directed the
petitioner to pay the 3rd respondent, the 2nd respondent on an assessment of the materials placed before him, by order dated 30th August,
1977,directed the petitioner to pay the 3rd respondent a sum of Rs. 5167.80 as gratuity under the Act. The petitioner appealed to the 1st
respondent and the 1st respondent, and the 1st respondent, by order dated 24th October 1978, declined to interfere in appeal and dismissed the
appeal of the petitioner. The petitioner challenges the orders of respondent 1 and 2 in the present writ petition and seeks quashing of the said
orders under Art. 226 of the Constitution of India.
The learned counsel appearing for the petitioner would submit that the 3rd respondent has been dismissed from service for a misconduct which
constitutes an offence involving moral turpitude in the course of his employment and hence he is not entitled for payment of gratuity under the Act
and the matter would come within the mischief of section 4(6)(b)(ii) of the Act and respondents 1 and 2 erred in countenancing the claim of the 3rd
respondent for payment of gratuity Mr. N. G. R. Prasad learned counsel appearing for the 3rd respondent wants to sustain the award of gratuity in
favour of his client by stating that the 3rd respondent resigned as early as 4th February, 1976 and this was in accordance with the concerned
standing order, which I shall presently refer to, and the resignation became effective on the lapse of 14 days from the date of receipt of the letter of
resignation, which date in the present case is 5th February, 1976, and the prosecution of disciplinary proceedings after the resignation became
effective was wholly incompetent and has got to be ignored and hence it is not possible to sustain the case of the petitioner that it was a case of
termination of the services of the 3rd respondent for a misconduct which involved moral turpitude. The learned counsel for the 3rd respondent did
not go into the question of the character of as to whether it involved moral turpitude or not since he wanted to sustain the award of gratuity on the
ground that the respondent resigned and this would attract Section 4(1)(b) of the Act entitling the 3rd respondent for payment of gratuity.
In meeting the contentions put forth by the learned counsel for the 3rd respondent, the learned counsel for the petitioner would state that the
resignation of the 3rd respondent had not been accepted and the 3rd respondent must be deemed to have continued in service and hence the
prosecution of the disciplinary action, conduct of the enquiry proceedings on 24th March, 1976 and the culmination of the same in the order of
dismissal on 8th May, 1976 are perfectly in order and the matter squarely comes within the ambit of Section 4(6)(b)(ii) of the Act and wants to
sustain the petitioner''s denial of gratuity to the 3rd respondent on the ground that his services were terminated for misconduct involving moral
turpitude.
In my view, occasion would not arise to consider the questions to whether the misconduct for which the petitioner was visited with the order of
dismissal of 8th May, 1976, involved moral turpitude or not because I am inclined to countenance the submission made by the learned counsel for
the 3rd respondent that by the resignation, the 3rd respondent went out of service even before the order of dismissal passed in disciplinary action
and hence the letter has no efficiency at all in the eye of law and in the said context, it is not possible to invoke Section 4(6)(b)(ii) of the Act and
the matter would come squarely within Section 4(1)(b) of the Act.
Before the matter is proceeded with it becomes incumbent to advert to the relevant provisions of the Act and the clause in the standing orders
which governs the service conditions in the petitioner-mills Section 4(1)(b) contemplated payment of gratuity on retirement of an employee or his
resignation and it reads as follows :
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.
xx xx xx
(b) on his retirement or resignation, or ........
Section 4(6) sets out exception to the payment of gratuity and it is open to the employer to with hold the payment of gratuity to the employee if
the conditions set out in clauses (a) and (b) are satisfied. In those contingencies, the employees forfeits the gratuity normally payable to him. In the
present case the petitioner wants to deny the 3rd respondent gratuity, bringing the case within the ambit of Section 4(6)(b)(ii). The said provision
reads as follows :
Notwithstanding anything contained in sub-section (i) .........
(b) the gratuity payable to an employee shall be wholly forfeited, .....
(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.
Clause 13 of the Standing Orders regulating the services under the petitioner-mills speaks about termination of employment. It is not necessary to
extract the entire clause and it would suffice the purpose if the relevant sub-clause, namely sub-clause (iv) is extracted and it reads as follows :
Any permanent worker desirous of leaving the service shall give fourteen day''s notice to the head of the department concerned. The wages due to
such a workman, must if possible, be paid on the day the notice expires and in any case within the two days after the expiry of the notice.
It is not disputed before me that the letter of the 3rd respondent who was a permanent employee dated 4th February, 1976 was one given by
him under the aforesaid clause. It is true that the expression used is ''resignation or razinama''. No issue has been raised before me on the ground
that on account of the user of the aforesaid expression, the letter of the 3rd respondent dated 4th February, 1976 would not be said to be one
issued under clause 13(iv) of the Standing Orders. Hence we can take it that the 3rd respondent chose to terminate his services pursuant to clause
13(iv) of the Standing Orders. It is well settled that mere unilateral resignation is not enough both in the case of a civil servant and in the case of an
ordinary master and servant governed by a contract, unless the resignation is accepted. A servant, who is bound by the agreement of service to
serve till his services are put an end to, must first make an offer intimating his intention to terminate his services and that offer must be accepted.
This is the primary principle governing the contract of service irrespective of the fact whether it is the case of a civil servant or even if the matter is
treated as a contract between the parties. But the condition of acceptance can be expressly or impliedly dispensed with either by the rules
governing the services or by agreement between the parties. The rules or the contract will regulate the conditions for tendering of resignation as
well as for its acceptance.
The classical judgment that is oft-quoted in the subsequent judicial pronouncements and by well known authors dwelling upon the subject of
contract of service and termination thereof, is that of Jenkins, C.J., pronounced in Ganesh v. G. I. P. Railway 1900 2 B.L.R. 790 and the learned
Chief Justice succinctly set out the proposition in the following terms :
Now a contract of service is continuing in its nature, and its continuance and the obligations under it can only be terminated in certain defined
modes. Mere resignation obviously is not enough unless it be asserted to, or unless it comply with those terms which the law implies or the prior
agreement of the parties may permit.
Ramesam, J., in Akula Sudarsana Rao Vs. J.A. Christian Pillai and Others, stated that without acceptance, resignation amounts to nothing and
the person resigning remains in office and to resign is not a matter of right and it is a question of fact in each case whether the resignation, amounted
to a renunciation without acceptance. It is obvious that the learned Judge has no lost sight of the contract of service or the rules providing otherwise
for the resignation to take effect without acceptance.
A Division Bench of the High Court, Mysore in M. Thiruvengadam Vs. The Indian Institute of Science and Others, considered a clause in the
agreement of service which read as follows :
that the employee may likewise terminate the contract of service by giving the Director or the Chief Executive ''six months'' notice in writing of his
intention of doing so.
The Division Bench found that the provision as to notice by the employee did not, as a matter of fact, proved for any acceptance and an
acceptance of a resignation in such circumstances is not always necessary or required in law. The learned judges referred to the dictum of Jenkins,
C.J., and took not of the proposition that the terms of the contract of service may permit resignation to take effect without formal acceptance.
Jagadisan. J., in Francis v. The General Manager, Southern Railway & Others (W.P. No. 525 of 1961, order dated 25th September, 1961)
Considered the case of an employee of the Railway and there was a service agreement as well as rules of the Indian Railway Establishment Code
relating to termination of service and resignation. The learned Judge also took note of the dictum of Jenkins, C.J., that the prior agreement between
the parties may permit a valid termination without the assent of the employer and the learned Judge, construing the provisions of the service
agreement and the rules of services, found that the notice given by the employee effectively terminated his services and further found that the
embrage under rule 150 of the Code with reference to acceptance of resignation of a railway servant, whose conduct was under investigation,
could not be availed of by the Railway to nullify the effect of termination of the employment because disciplinary proceedings had not commenced
before such termination and they commenced only subsequently.
In Harabilas v. I. T. Commissioner ATR 1963 Cal 359, Banerjee, J., considered the scope of rule V of the Central Services (Temporary
service) Rules, 1945, which provided for the service of a temporary Government servant getting terminated at any time by notice in writing given
either by the Government servant to the appointing authority or by the appointing authority to the Government Servant and the period of such
notice was stipulated to be one month unless otherwise agreed to by the Government or by the Government servant. The learned Judge, of course,
on facts found that the letter of resignation given by the employee did not satisfy the above rule as contended by the department but did
countenance the proposition of law that the right to proceed against an employee departmental subsists so long as there remains the relationship of
master and servant between the employer and the employee and as soon as that relationship comes to an end, the employer or the appointing
authority can no longer punish an employee departmentally.
Venkataraman. J., in M. S. Subramaniam v. State by Union of India (1968) MLJ 102 dealt with a case where the employee, when he was
faced with a criminal prosecution for offences under the Prevention of Corruption Act after he tendered his resignation, wanted to stultify the
criminal proceedings by putting forth the plea that the Government had not accepted his resignation on the date when the charge sheet was laid
against him and hence he must be deemed to have had been in service and the prosecution, without sanction was incompetent. The rule dealt with
by the learned Judge was similar to the one dealt with by Banerjee, J., in the above Calcutta case, and the learned Judge held that the rule is
complete and that either the Government may terminate the service the employee after a month''s notice of the Government servant may terminate
the employment after giving a month''s time and nothing more is required.
The above judicial pronouncements reiterate and delineate the proposition in law that though resignation, to take effect, should normally be
accepted, yet, the rules governing the services or the contract between the parties could expressly or impliedly provide otherwise. The rule of the
term of the contract of service may provide the mode in which the employee could go out of service and there cannot be any insistence of the
formality of acceptance of the resignation or of the employee going out of service voluntarily. If in tendering resignation or terminating the contract
of service, the employees has adhered to and satisfied either the rule or the condition in the contract on service, that would suffice the matter to put
an end to the services and once the services have been put an end to, it is not competent for the employer either to commence or to continue
disciplinary action against the employee who has gone out of his employment. Equally so, a term in the contract of service of the rule governing the
services may provide that the resignation by, or the termination of services at the instance of, the employee will not be effective when disciplinary
proceedings have already commenced and are pending against the employee as contemplated in the rules deal with by Jagadisan. J., in Francis v.
The General Manager, Southern Railway & Others. (W.P. No. 525 of 1961 order dated 25th September, 1961). There again, if the employee
goes out of service earlier to the commencement of disciplinary proceedings, such proceedings will be wholly incompetent and will be without
jurisdiction.
The learned counsel for the petitioner made strenuous endeavours to sustain the proposition that from Clause 13(iv) of the Standing Orders an
implied term requiring acceptance of the resignation must be spelt out. This is a futile endeavour and a reading of the clause extracted above, does
not permit this. Realising this hurdle, the learned counsel for the petitioner projected a further proposition that the disciplinary proceedings having
had been commenced by the issue of notice of charges even on 3rd October, 1975 it is not open to the 3rd respondent to go out of service by
addressing a letter of termination or resignation on 4th February, 1976. This again is a misconception. A bare commencement of disciplinary
proceedings does set by itself inhibit the employee from terminating his services with the employer as per the condition of service under the
contract or the rules governing the services, unless they provide otherwise. If there is possibility that the employee, pending disciplinary
proceedings, has been suspended according to the rules governing these services, which order of suspension can be deemed to have suspended
the contract of service itself, then it may not be open to the employee to unilaterally terminate his services.
In V.P. Gidroniya Vs. The State of Madhya Pradesh and Another, , the Supreme Court discussed the legal position as regards the right to
place servants under suspension with reference to its earlier pronouncements and found that rules in that case did not provide for suspension during
the pendency of an enquiry and held that the order of suspension in that case could not be considered as an order suspending the contract of
service and hence the contract of service was in force and it was open to the servant to put an end to the same.
In the present case, there is no order of suspension so as to consider the question as to whether such an order of suspension was in conformity
with any rule governing the service conditions so that it can be stated that the order of suspension suspended the contract of service and the 3rd
respondent could not unilaterally terminate his services with the petitioner. Here we have only the issue of notice of charges on 3rd October, 1975.
The enquiry proceedings were held on 24th March, 1976 and the findings were rendered on the same date and the order of dismissal came to be
issued only on 8th May, 1976. Earlier to the enquiry proceedings and the order of dismissal, the 3rd respondent has submitted his letter of
resignation or termination of his services with the petitioner and it was in accordance with clause 13(iv) of the Standing Order and there is no
impediment to spell out the only position that the services of the 3rd respondent with the petitioner stood terminated with the lapse of 14 days from
the date of service of the letter of the 3rd respondent on the petition, namely on 5th February, 1976. Hence, the conduct of enquiry proceedings
on 24th March, 1976 and the consequential order of dismissal on 8th May, 1976 have no sanctity in the eye of law since the 3rd respondent''s
services stood terminated even earlier to those dates and he had already gone out of the employment of the petitioner. It is significant to note that
the 3rd respondent had gone before the 2nd Respondent claiming gratuity under the Act even on 2nd May 1976 and that was also earlier to the
order of dismissal dated 8th May, 1976, I feel obliged to state that in Gisdrosiva case the Supreme court dealt with a rule which in tenor is similar
to clause 13(iv) of the present Standing Ordered and the Supreme Court pointed out that the servant by giving notice in accordance with the rule,
has unequivocally informed the Government that he has terminated the services with the Government and that put an end to the services and
therefore, it was not open to the Government to take any disciplinary proceedings against him thereafter.
The expression ""resignation"" is not a term of act, ''to resign'' means ''to relinquish'' and ''to give up office and employment'' and one of the
dictionary meanings of the expression ''resignation'' is ''act to giving up''. Clause 13(iv) of the Standing Orders appears to be the only provision by
virtue of which an employee under the petitioner of his own accord can go out of employment and give up his office. Hence the process of going
out of office can be equated only to resignation. We are not facing two sets of rules, on providing for termination of services and another providing
for resignation as in the case dealt with by Jagadisan, J., in Francis v. The General Manager, Southern Railway & Others (W.P. No. 525 of 1961,
order dated 25th September, 1961). The 3rd respondent, by writing the letter on 4th February, 1976, obviously under clause 13(iv) of the
Standing Orders, has gone out of office which was, in fact, nothing but a resignation.
The position, factual and legal, being what it is, the only conclusion I could arrive at is that earlier to the purported termination of services of the
3rd respondent by the petitioner on 8th May, 1976, the 3rd respondent had gone out of the employment of the petitioner on resignation and this
would attract Section 4(1)(b) of the Act and thereafter, it is not possible to invoke Section 4(6)(b)(ii) of the Act.
In this view, I am not able to persuade myself to interfere in writ proceedings and accordingly, the writ petition is dismissed. No costs.