IN THE HIGH COURT OF JHARKHAND AT RANCHI W.P. (L) No of 2013

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1 1 IN THE HIGH COURT OF JHARKHAND AT RANCHI W.P. (L) No of 2013 M/s. Bharat Coking Coal Limited, Dhanbad... Petitioner Versus Sri Arun Krishna Rao Hazare, Ex General Manager (HRD), Bharat Coking Coal Limited, Dhanbad. Respondent CORAM: For the Petitioner For the Respondent HON BLE MR. JUSTICE SHREE CHANDRASHEKHAR : Mr. Anoop Kr. Mehta, Advocate : None 3 / Seeking quashing of order dated passed by the Controlling Authority under the Payment of Gratuity Act, 1972 and seeking quashing of order dated passed by the Regional Labour Commissioner (Central), Dhanbad cum Appellate Authority under the Payment of Gratuity Act, 1972, the petitioner M/s. Bharat Coking Coal Limited has preferred the present writ petition. 2. The brief facts of the case are that, a case vide RC 13(A)/06/ A 0013 was registered by CBI against the respondent employee and sanction for prosecution was granted on by the Chairman, Coal India Limited. On account of his involvement in the criminal case, the respondent was suspended vide order dated A departmental proceeding under Rule 29 of the Coal India Executives' Conduct Discipline and Appeal Rules, 1978 was initiated vide order dated against the respondent employee. While the criminal case as well as the departmental proceeding continued, the respondent who was

2 2 appointed as an Executive in BCCL, attained the age of superannuation on The petitioner M/s. Bharat Coking Coal Limited however, deposited the gratuity amount of Rs.10 Lacs vide Cheque dated with the Controlling Authority under the Payment of Gratuity Act, 1972 with a request not to disburse the amount till finalisation of the proceeding, which was initiated against the respondent employee while he was in service. The respondent employee submitted an application on in Form N for release of gratuity amount, before the Controlling Authority, which was registered as P.G. Case No.36(46)/2011 E 6. The petitioner submitted written statement on taking a plea that in view of Rulses 34.2 and 34.3 of the Conduct, Discipline and Appeal Rules, 1978, the amount of gratuity be withheld till the disposal of the criminal/departmental proceeding. The respondent examined himself and admitted the pendency of the criminal case and the departmental proceeding. However, the controlling authority vide order dated held that in view of Section 4(6) of the Payment of Gratuity Act, 1972, the amount of Gratuity cannot be withheld merely on account of pendency of the criminal case and directed the respondent employee to apply in the prescribed proforma for payment of the gratuity amount. An appeal being P.G. Appeal No.21/2012 was preferred by the respondent employee for payment of interest on the gratuity amount from The petitioner M/s. Bharat Coking Coal

3 3 Limited also preferred an appeal being, P.G. Appeal No. 20/2012. Both the appeals were heard together and vide order dated , both the appeals have been dismissed by Appellate Authority. 3. Heard learned counsel appearing for the petitioner. 4. Mr. Anoop Kumar Mehta, the learned counsel appearing for the petitioner relying on judgment in State Bank of India Vs. Ram Lal Bhaskar & Anr., reported in (2011) 10 SCC 249 and in Chairman cum Managing Director Mahanadi Coalfields Ltd. Vs. Rabindranath Choubey (Civil Appeal No.9693 of 2013) submits that in an identical case, the Hon'ble Supreme Court affirmed the order withholding gratuity during pendency of the departmental proceeding and in view of the decision of a larger Bench of Hon'ble Supreme Court in Ram Lal Bhaskar's case, the Rabindranath Choubey case has been referred to a larger Bench and thus, judgment in Ram Lal Bhaskar's case holds the field today. It is further submitted that in view of the deeming provision under Rule 34.2, the departmental proceeding initiated against the respondentemployee has continued and since the disciplinary authority has power under Rule 34.3 of the Conduct, Discipline and Appeal Rules, 1978 to withhold payment of gratuity during the pendency of the disciplinary proceeding, the Controlling Authority has erroneously ordered payment of gratuity amount and the said order has been affirmed by the Appellate Authority, ignoring the settled law in this

4 4 behalf. 5. I have carefully considered the submission of the learned counsel for the petitioner and perused the documents on record. 6. Long back, it has been held that right to receive pension is a valuable right of government servant, of which, a government servant cannot be denied except in accordance with procedure laid down in law. Ordinarily, pension includes gratuity except when the term 'pension' is used in contra distinction to gratuity. In Balbir Kaur & Anr. Vs. Steel Authority of India Ltd. & Ors., reported in (2000) 6 SCC 493, it has been held that, the payment of gratuity is no longer in the realm of charity but a statutory right provided in favour of the employee. In Sudhir Chandra Sarkar Vs. Tata Iron and Steel Co. Ltd. and Others, reported in (1984) 3 SCC 369, the Hon'ble Supreme Court, has observed as under, 17. Can such social security measure be denuded of its efficacy and enforcement by so interpreting the relevant rules that the workman could be denied the same at the absolute discretion of the employer notwithstanding the fact that he or she has earned the same by long continuous service? If Rule 10 is interpreted as has been done by the High Court, such would be the stark albeit unpalatable outcome. It is therefore necessary to take a leaf out of history bearing on the question of retiral benefits like pension to which gratuity is equated. In Burhanpur Tapti Mills Ltd. v. Burhanpur Tapti Mills Mazdoor Sangh this Court observed that : a scheme of gratuity and a scheme of

5 5 pension have much in common. Gratuity is a lump sum payment while pension is a period payment of a stated sum. Undoubtedly both have to be earned by long and continuous service. 7. The learned counsel for the petitioner relied on Rules 34.2 and 34.3 of the Coal India Executives' Conduct, Discipline and Appeal Rules, 1978, which are extracted below: Rule 34.2 Disciplinary proceeding, if instituted while the employee was in service whether before his retirement or during his re employment shall, after the final retirement of the employee, be deemed to be proceeding and shall be continued and concluded by the authority by which it was commenced in the same manner as if the employee had continued in service. Rule 34.3 During the pendency of the disciplinary proceedings, the Disciplinary Authority may withhold payment of gratuity, for ordering the recovery from gratuity of the whole or part of any pecuniary loss caused to the company if have been guilty of offences/misconduct as mentioned in Sub Section (6) of Section 4 of the Payment of Gratuity Act, 1972 or to have caused pecuniary loss to the company by misconduct or negligence, during his service including service rendered on deputation or on reemployment after retirement. However, the provisions of Section 7(3) and 7(3A) of the Payment of Gratuity Act, 1972 should be kept in view in the even of delayed payment, in the case the employee is fully exonerated. 8. In Allahabad Bank & Anr. Vs. All India Allahabad Bank

6 6 Retired Employees Association, reported in (2010) 2 SCC 44, it has been held that gratuity being a statutory right cannot be taken away except, in accordance with the provisions of the Act. In Jaswant Singh Gill Vs. Bharat Coking Coal Ltd. & Anr., reported in (2007) 1 SCC 663, Rules 27 and 34 of the Coal India Executives' Conduct, Discipline and Appeal Rules, 1978 have been considered by the Hon'ble Supreme Court and it has been held that power to withold gratuity under Rule 34.3 of the Rules must be subject to the provisions of the Payment of Gratuity Act. Rule 27 of the Coal India Executives' Conduct, Discipline and Appeal Rules, 1978 provides for recovery from gratuity only to the extent of loss caused to the company by negligence or breach of orders or trust however, penalties must be imposed so long an employee remains in service. The Hon'ble Supreme Court has held thus: 12. A statutory right accrued, thus, cannot be impaired by reason of a rule which does not have the force of a statute. It will bear repetition to state that the Rules framed by Respondent 1 or its holding company are not statutory in nature. The Rules in any event do not provide for withholding of retiral benefits or gratuity. 13. The Act provides for a close knit scheme providing for payment of gratuity. It is a complete code containing detailed provisions covering the essential provisions of a scheme for a gratuity. It not only creates a right to payment of gratuity but also lays down the principles for quantification thereof as also the conditions on which he may be denied therefrom. As noticed hereinbefore,

7 7 sub section (6) of Section 4 of the Act contains a non obstante clause vis à vis sub section (1) thereof. As by reason thereof, an accrued or vested right is sought to be taken away, the conditions laid down thereunder must be fulfilled. The provisions contained therein must therefore, be scrupulously observed Referring to the decision in Chairman cum Managing Director Mahanadi Coalfields Ltd. Vs. Rabindranath Choubey, it is to be noted that the issue which has been referred for authoritative pronouncement by a larger Bench is, whether after superannuation, a major penalty of dismissal can be imposed upon the delinquent employee or not. In the said case, the Hon'ble Supreme Court has observed as under, 23. The issue which confronts us in the instant appeal is as to whether gratuity can be withheld in the wake of Rule 34 of CDA Rules when examined in juxtaposition with the provisions of the Gratuity Act, gratuity has to be necessarily released to the concerned employee on his retirement even if department proceedings are pending against him. We find that Jaswant Singh Gill's case directly answers this question, that too in the context of these very CDA Rules. However, it is because of the reason that the said judgment proceeds on the basis that after the retirement of an employee, penalty of dismissal cannot be imposed upon the retired employee. If this view is not correct and the imposition of penalty of dismissal is still permissible, employer will get the right to forfeit the gratuity of such an employee in the eventualities provided

8 8 under Sections 4(1) & 4(6) of the Payment of Gratuity Act Coming to the facts of the case, I find that though the respondent employee superannuated from service w.e.f , the departmental proceeding initiated against the respondent employee has been continued after his retirement. Under Rule 34.2, there is a deeming provision for continuing the departmental proceeding initiated against a delinquent employee even after the employee retires from service however, I am of the opinion that even for the purpose of Rule 34.2 of the Coal India Executives' Conduct Discipline and Appeal Rules, 1978, a formal order is required to be issued for continuing the departmental proceeding against the delinquent employee. The deeming provision is only an enabling provision. Admittedly, in the present case, no such order has been passed by the competent authority. A distinction between sanction for continuing a departmental proceeding even after superannuation of the delinquent employee and a formal order in terms of Rule 34.2 of the Rules, is of some significance. Leaving aside this aspect of the matter, it is not in dispute that the departmental proceeding and the criminal case registered against the respondent employee are still pending. It is also an admitted position that there is no statutory provision for withholding the retiral benefits or gratuity of a retired employee. It is interesting to note the plea taken by the petitioner which suggests

9 9 that in anticipation of the charges against the delinquent employee found proved and consequently, the delinquent employee dismissed from service or that the delinquent employee would be convicted in the criminal case, the amount of gratuity must be withheld. Such a plea does not appeal to reason and atleast it cannot be said to be a just and fair procedure. The decision in Jarnail Singh Vs. Secretary, Ministry of Home Affairs, reported in (1993) 1 SCC 47 also affirms the view that in absence of a statutory provision to withhold payment of gratuity, an employee cannot be deprived of his right to receive the amount of gratuity. In the said case, in view of specific provision under the Central Civil Services (Pension) Rules, 1972, it was held that the employer had the right to withhold payment of gratuity to the employee. As noticed above, in the Coal India Executives' Conduct, Discipline and Appeal Rules, 1978, there is no specific provision empowering the employer to withhold the gratuity. I do not find any infirmity in the impugned orders. 11. In view of the above discussions, I find no merit and accordingly, the writ petition is dismissed. R.K./A.F.R. (Shree Chandrashekhar, J.)

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