Seli Ray Chaudhury And Ors vs State Of Tripura And Ors

Petitioners are the legal heirs of deceased Subir Roy Chowdhury. Petitioner No.1 is a widow and petitioners No.2 and 3 are daughter and son respectively of Late Subir Roy Chowdhury. Subir Roy Chowdhury had joined his service under Tripura Khadi and Village Industries Board (hereinafter to be referred to as the "Khadi Board") on 16.09.1981. He was placed under suspension on 20.09.2014 pending departmental inquiry. It appears that the employee was suffering from blood cancer and he died while still in service, on 16.06.2015. Till this point of time no charge-sheet was issued against him. The petitioners have raised several demands of unpaid wages and death-cum-retiral benefits. In the nutshell, their claims are as under:-

(i) It is pointed out that the Khadi Board has paid gratuity by applying a ceiling of Rs.4,00,000/-, ignoring the revised ceiling of Rs.10,00,000/- under the Payment of Gratuity Act, 1972 (the Act, for short). It is also contended that the gratuity which was paid, was also much delayed. To the extent of such delay, the petitioners claim interest;

(ii) It is contended that while calculating the gratuity payable, only the basic pay of the employee was taken into account, ignoring the dearness allowance component. According to the petitioners, this is contrary to the provisions of the said Act;

(iii) While making payment of salary for the suspension period, a sum of Rs.1,07,240/- was withheld. This was on the ground that there was wrong pay fixation in favour of the employee under Revision of Pay Rules, 2009 (ROP 2009, for short). According to the petitioners, since such overpayment, was not on account of any misrepresentation or fraud on part of the employee, in facts of the present case the recovery would be wholly inequitable;

(iv) According to the petitioners, there was inordinate delay in forwarding the documents by the employer to the Provident Fund Commissioner for payment of EPF pension. The employee expired on 16.06.2015 whereas the necessary documents were forwarded by the employer only on 29.04.2016. To the extent of delay, the petitioners seek interest;

(v) It is pointed out that an amount of Rs.1,86,560/- was withheld from the leave encashment of the deceased towards the recovery of the outstanding bank loans. According to the petitioners, Khadi Board could not have acted as a recovery agent of the bank. The bank could have proceeded in accordance with law for recovering unpaid loan but the employer cannot affect recovery directly from the amounts payable to the employee without consent. It is also the case of the petitioners that a sum of Rs.89,770/- was deducted from pay and allowances and paid to the bank for alleged unpaid dues of the deceased which was also illegally done;

(vi) The case of the petitioner is that all medical bills were submitted by 27.05.2014. However, the amount was reimbursed only in June, 2015, i.e. after more than one year. The employer must, therefore, pay interest on such delayed payment.

In this background, we may notice the facts emerging from the record.

As noted, Subir Roy Choudhury was placed under suspension on 20.09.2014. While still on suspension he died on 16.06.2015 till which point of time no departmental charge-sheet was issued against him. His legal heirs were thus entitled to all service benefits. It appears that the Khadi Board sanctioned payment of Rs.4,00,000/- by way of gratuity on 28.12.2015. Petitioners would point out that the entire amount of gratuity should have been paid within one month from the death of the employee. In this case, there is a delay of 6(six) months beyond such period. Further, the gratuity is calculated by taking into account the last basic pay of Rs.33,313/-of the employee ignoring the dearness allowance. They also contend that the ceiling of Rs.4,00,000/- for payment of gratuity is wrongly applied since such ceiling was already revised by the amendment in the Payment of Gratuity Act by Payment of Gratuity (Amendment) Act, 2010 dated 17.05.2010. The revised limit was Rs.10,00,000/-.

It is pointed out that under a memorandum dated 28.12.2015 Khadi Board sanctioned payment of the leave encashment of a sum of Rs.5,62,940/-. However, out of the said amount, a sum of Rs.1,86,560/- was deducted towards outstanding dues of the bank loan of the employee. Petitioners contend that the Khadi Board could not have acted as a recovery agent of the bank. The bank could have sought recovery of the outstanding loan, if any, in accordance with law and the employer could not have directly paid any amount from the entitlement of the petitioners without their consent.

It is further pointed out that under memorandum dated 30.12.2015 Khadi Board sanctioned payment of a sum of Rs.2,45,185/-towards arrears of pay and allowances of the deceased after adjusting subsistence allowances already paid. Out of this amount, a sum of Rs.1,07,240/- was deducted towards the recovery of alleged overpayment of the pay and allowances due to wrong fixation of ROP, 2009 and a further sum of Rs.89,770/- towards alleged outstanding dues of the bank loans of Agartala Co-operative Urban Bank Ltd.

The petitioners point out that the medical reimbursement bill of Rs.13,79,828/- was submitted along with necessary bills on 27.05.2014. This was supported by necessary documents. The employer raised queries which were all clarified by the employee. This was pointed out in his representation dated 02.05.2015. The employer replied on 08.05.2015 that medical reimbursement cannot be granted. Eventually after the death of the employee medical reimbursement was made on 16.06.2015.

The respondents have filed replies. The reply of the State Government is relevant to the limited purpose of noting the stand of the Government that since the amendments in the said Act extending the ceiling of gratuity of Rs.10,00,000/- were not extended to the Khadi Board, the employees were not entitled to such higher limit.

Khadi Board has filed a reply dated 03.08.2017 in which all the claims of the petitioners have been disputed. It is contended that the revised ceiling of gratuity had not been adopted by the Khadi Board. It is further pointed out that the widow of the deceased had made the claim for post death benefits under a letter dated 06.11.2015 after which promptly all the dues were cleared by the department. It is pointed out that the present case was an unusual one where the employee had not retired on superannuation but died while under suspension. The respondents have also supported various deductions of outstanding bank loans and overpayments of salary. In particular, it is pointed out that the dues of Tripura Gramin Bank were adjusted at the request of the bank. The loan application made by the employee contained an undertaking for recovery of the entire amount of loan with interest from the emoluments of the employee which undertaking was forwarded by the bank to the Khadi Board. Likewise regarding the recovery of the dues of Agartala Co-operative Urban Bank Ltd. also the bank had produced an authority letter of the employee borrower authorizing such recovery. On the strength of such an authority letter, the Khadi Board had adjusted the outstanding dues of the bank. It is further pointed out that in case of the deceased as well as other employees of the Khadi Board erroneous pay fixation under ROP, 2009 were made. Overpaid salaries were being recovered from all employees.

With respect to the medical reimbursement, it is stated that the claim submitted did not contain various necessary documents. For example, the cash memos were not countersigned by the medical officer of the hospital, certificates of rates of hospital where the treatment was taken instead of referral hospital were also not provided. All these anomalies required clarifications. There was thus no delay on part of the respondents in making such payment.

With respect to the gratuity, I find that the petitioners are perfectly justified in pointing out that not only the basic wages but the dearness allowance also would have to be taken into account while computing payable gratuity. Section 2(s) of the said Act defines the term "wages" as under:

"2(s) "wages" means all emoluments which are earned by an employee while on duty or on leave in accordance with the terms and conditions of his employment and which are paid or are payable to him in cash and includes dearness allowance but does not include any bonus, commission, house rent allowance, overtime wages and any other allowance."

Thus, by the very definition "wages" would include not only the basic pay but also the dearness allowance. This clear statutory provision leaves no manner of doubt. In any case, this aspect has been examined by this Court in case of Samir Kumar Ghosh Vs. State of Tripura reported in 2020 SCC Online Tri 218. Single Judge of Bombay High Court also had occasion to consider similar issue in case of Vidarbha Konkan Gramin Bank Vs. Appellate Authority reported in 2020 SCC Online Bom 17. The employer must, therefore, re-compute the gratuity payable to the legal heirs of the deceased by taking into account basic pay plus dearness allowance at the time of his death.

The revised ceiling of Rs.10,00,000/- by virtue of the amendment [Payment of Gratuity (Amendment) Act, 2010 (No.15 of 2010)] in the said Act would also be applicable in the present case. This amendment was brought into effect from 24.05.2010. The deceased having died after the said date, revised ceiling limit would automatically apply once the said Act was amended. Thereafter there was no further need for the Khadi Board to adopt such revised limits or for the State Government to permit such adoption. This aspect has been made clear by a series of decisions of this Court. Reference to some of them would be sufficient.

WP(C) No.1054 of 2019 [Sri Bhupati Debnath vs. The State of Tripura and others] decided on 13.02.2020.

WP(C) No.1057 of 2019 [Smt. Mamata Singha Roy vs. The State of Tripura and another] decided on 13.02.2020.

WP(C) No.1209 of 2019 [Lal Zakim Rokhum vs. Tripura Road Transport Corporation & another] decided on 20.02.2020.

WP(C) No.1091 of 2017 [Sri Samir Kr. Ghosh vs. The State of Tripura and others] decided on 29.05.2020.

Coming to the recoveries of the outstanding bank loans from leave encashment and unpaid salary for the suspension period, I do not find any fault on part of the employer. The deceased while in employment, had secured loans from Tripura Gramin Bank and Agartala Co-operative Urban Bank Ltd. At the time of his death as per the bank records there were unpaid dues of the deceased. Both the banks had produced undertaking/authority letter of the borrower agreeing to the recovery from his entitlements from the employer in case any part of the loan remained unpaid. The employer merely acted on such undertaking/authority granted by the employee. Employee or his legal heirs cannot object to such a mode of recovery. One must bear in mind that the deceased received such soft loans from the banks with limited security to be provided for such loans on the premise that he was an employee of the Khadi Board. The bank loans were primarily secured through the assured salary and other service benefits of the borrower. The legal heirs of the deceased borrower cannot take a technical plea that the employer could not have made direct payment of the unpaid dues of the banks and the bank should have been driven to filing appropriate proceedings before the Courts of law for such recoveries. The banks have also not been joined as respondents in the present petition. If the petitioners have any disputes with banks, they must agitate them separately. No effective relief, therefore, can be granted to the petitioners on this score.

Coming to the question of recovery of alleged overpayments of salary from the unpaid salary for the suspension period, I find that the same was impermissible. It is not the case of the Khadi Board that the overpayment of salary was on account of any fraud or misrepresentation on part of the employee. Under such circumstances, it would have to be ascertained whether in facts of the present case it would be inequitable to permit the employer to raise the recovery. Peculiar facts of the case are that the employee was placed under suspension pending inquiry. However, the employee was suffering from an advanced stage of blood cancer and eventually succumbed to the said disease. Till the time he died, Khadi Board had not initiated the departmental inquiry by issuance of a charge-sheet. The recovery of the overpayment of salary thus would be from the entitlements of the legal heirs and dependents of the deceased which consisted of his widow and two children who were minor at the time of his death. It is pointed out that the widow of the deceased was unemployed. He was the only earning member of the family. Considering all these aspects of the matter, permitting recovery of alleged overpayment of salary to the deceased would be wholly inequitable. The same would, therefore, have to be set aside.

I do not find any gross delay in other payment of gratuity of Rs.4,00,000/- or reimbursement of medical bills or forwarding the papers of the deceased for payment of pension under EPF scheme. Present was a simple case where the employee was under suspension and before his superannuation died. As pointed out by the Khadi Board in its reply the widow herself had raised the claims of post death benefits more than 4(four) months after the death of the employee. The gratuity was paid within less than one month thereafter. Medical reimbursement claims required clarifications and curation. Considering all these aspects of the matter, the petitioners would not be entitled to interest on delayed payments of gratuity, medical reimbursement or EPF pension.

In the result, petition is disposed of with following directions:-

(i) The respondents shall recalculate the gratuity payable upon death of the deceased employee by taking into account his basic pay and dearness allowance at the time of death. Such recalculated gratuity shall be paid to the petitioners by applying the revised limit of Rs.10,00,000/-. The difference between the revised payable amount as per this direction and Rs.4,00,000/- already paid previously, shall carry simple interest @ 7% per annum from the date the sum of Rs.4,00,000/- was paid to the petitioners till actual payment;

(ii) A sum of Rs.1,07,240/- recovered from the arrears of salary of the deceased towards alleged overpayment of salary is set aside. Such amount, however, shall be refunded without interest if the same is paid within a period of 3(three) months from today, failing which after such period this amount shall carry simple interest @ 7% per annum till actual payment.

These directions shall be carried out within a period of 3(three) months from today.

Petition is disposed of accordingly.

Pending application(s), if any, also stands disposed of.