1 IN THE HIGH COURT OF KARNATAKA AT BANGALORE DATED THIS THE 25 th DAY OF MARCH, 2013 BEFORE THE HON BLE MR. JUSTICE ARAVIND KUMAR REGULAR FIRST APPEAL NO.224 OF 2010 BETWEEN: SRI GANESH SHENOY, AGED ABOUT 57 YEARS, S/O SRI GOPALKRISHNA SHENOY, RESIDING AT NO.391, 5 TH MAIN, BSK I STAGE, BANGALORE -50. APPELLANT (BY SRI B.C.SEETHA RAMA RAO, ADV.) AND M/S. THE MANAGEMENT OF SHETRON LIMITED, NO.26/3-A, SANKEY ROAD, BANGALORE 560 052. REP. BY ITS MANAGING DIRECTOR. RESPONDENT (BY SRI SOMASHEKAR, ADV. FOR M/S. S.N.MURTHY ASSTS.) THIS RFA IS FILED U/S 96 R/W ORDER XLI RULE 1 OF CPC, AGAINST THE JUDGMENT AND DECREE DATED 4.8.2009 PASSED IN O.S.NO.7740/2000 ON THE FILE OF THE XXX ADDL. CITY CIVIL JUDGE, BANGALORE, DISMISSING THE SUIT FOR RECOVERY OF MONEY. THIS APPEAL COMING ON FOR HEARING THIS DAY, THE COURT DELIVERED THE FOLLOWING:-
2 J U D G M E N T Appellant plaintiff is in appeal challenging the correctness and legality of judgment and decree passed by XXX Addl. City Civil Judge, Bangalore, in O.S.No.7740/2000 dated 04.08.2009, whereunder suit of plaintiff for recovery of money has been dismissed. 2. Heard Sri.B.C.Seetharama Rao, learned counsel appearing for appellant plaintiff and Sri.Somashekar, learned counsel appearing on behalf of M/s.S.N.Murthy Associates for respondent defendant. Perused the judgment and decree passed by Trial Court as well as records of Trial Court. 3. Sri. B.C. Seetharama Rao, learned counsel appearing for appellant would contend that Trial Court committed a serious error in dismissing the suit filed by plaintiff by concluding that there is no evidence to prove that plaintiff had issued three months prior notice to defendant before his resignation, on the ground that such an issue never arose and he also contends when
3 defendant themselves had paid three months salary by calculating the basic salary and not the gross salary question of plaintiff proving this fact did not arise at all. He would elaborate his submission by contending that Trial Court erred in arriving at a conclusion that plaintiff had failed to prove that he had 240 days of privilege leave to his credit as on 10.01.2000 and said finding is contrary to material evidence available on record namely Exhibits P-11 and P-12, which are the salary slips of plaintiff issued by defendant itself for the months of November and December 1999 which would indicate that plaintiff had 244 days of privilege leave to his credit. He would also contend that Trial Court committed an error in holding that under Clause 3 of Personal Policy Manual Revision 05 would govern the plaintiff to arrive at a conclusion that encashment of privilege leave will be based on basic salary, on the ground that said revision has been issued on 01.08.2000 i.e., after seven months after plaintiff was relieved from services of defendantcompany and as such it was not binding on plaintiff. He
4 also submits that no such policy was made known to plaintiff despite his request as per Ex.P.6 letter dated 9.5.2000. He also contends that Trial Court erred in not considering the contents of Exhibit P-13 namely, the Personnel Policy - Leave Rules Staff Members dated 01.07.1999 which was the service condition, which was in force on the date on which plaintiff resigned, which provides for calculation required to be adopted for settling retiral benefits. Hence, he contends that based on Exhibit P-13 benefits had to be paid to plaintiff and it was required to be calculated as such and not based on Exhibit P-14, which came into vogue subsequent to plaintiff being relieved from services. As such, he prays for setting aside the judgment and decree passed by Trial Court and for decreeing the suit as prayed for. 4. Per contra, Sri Somashekar, learned counsel appearing for respondent - defendant would support the judgment and decree passed by Trial Court and contends that even as per Exhibit P-13, accumulation of banked leave would be maximum for 90 days period and an
5 employee will not be given at any one time PL in excess of 2 years accumulation, but due to oversight the Finance Division of defendant-company calculated the leave encashment by taking into consideration 225 days, which itself was erroneous and as such, excess amount came to be paid to plaintiff and this fact has been brought to the notice of defendant by reply notice dated 27.07.2000 and as such, he submits that defendant is not entitled for decree towards leave encashment. He would also submit that plaintiff did not demonstrate before Trial Court for having submitted letter of his intention to resign by giving three months notice and as such there is no justification on the part of plaintiff in demanding notice of pay (3 months) and dehors said defence, on humanitarian grounds defendant had paid a sum of ` 40,050/- towards three months notice period of salary by taking into consideration the basic pay and he submits on these grounds a demand for refund of an amount ` 1,26,825/- was made on the defendant by reply notice dated 27.06.2000 and in order to ensure that
6 the ex-employee is not put to any hardship or inconvenience, no counter claim was raised before Trial Court and as such, he contends that judgment and decree passed by Trial Court dismissing the suit does not suffer from any infirmity or call for inference and as such he seeks for dismissal of the appeal. 5. Having heard the learned Advocates appearing for the parties and on perusal of judgment and decree passed by Trial Court, as well as records of Trial Court, I am of the considered view that following points would arise for my consideration: 1. Whether judgment and decree passed by Trial Court in O.S.No.7740/2000 dated 04.08.2009 dismissing the suit for recovery of money of ` 1,20,225/- along with interest is to be affirmed reversed, or verified? 2. What order? 6. Parties are referred to as per their ranking in Trial Court. Facts leading to filing of this appeal are as under:
7 Plaintiff filed a suit for recovery of ` 1,20,225/- along with future interest @ 24% p.a. and costs of proceedings contending interalia that he was working as Assistant General Manager in the defendant company and submitted his resignation for the post held by him since he secured a better assignment, which came to be accepted by defendant and plaintiff was relieved from service with effect from 10.01.2000; Plaintiff received a sum of ` 1,47,675/- from the defendant towards full and final settlement payable to him and on going through the statement of accounts, plaintiff noticed that there were certain discrepancies in the calculation, which was not calculated properly and there was a difference of 20 days in EL calculation and that leave encashment benefit was calculated only on the basic pay as against the normal practice of taking all the components into account while calculating the leave encashment benefit. It was also contended that defendant having not paid three months notice period of pay to plaintiff a letter was issued to the defendant to pay the said amount and despite such
8 demands, defendant did not settle the amount but gave evasive reply and therefore, legal notice came to be issued, which was denied by defendant and as such plaintiff filed a suit for recovery of amount of `.1,20,225/- with interest. 7. On service of suit summons respondentdefendant appeared and filed written statement denying the averments made in the plaint, it was contended that as per the Personal Policy Manual Revision-05, Clause 3, employees having completed three years of service are entitled for leave encashment and if leave encashment is for more than 30 days they are required to get the approval of Managing Director or Vice President and on retirement of an employee all banked / frozen leave along with current leave balance and accrued leave till date of relieving would be encashed and for the said purpose of encashment basic salary alone would be considered. It was further contended that said revised rules is effective from calendar year 2000 i.e. January 2000 onwards; Since plaintiff submitted his resignation on 10.01.2000
9 the Revision 05 i.e, revised rules is applicable to plaintiff; Since he submitted his resignation on 10.01.2000 as per revised rules applicable, the leave encashment has been granted to plaintiff based on basic salary; It was also contended that plaintiff is not entitled for three months notice pay since he had not produced the notice of resignation; Plaintiff had only 225 days privilege leave in his credit and defendant has paid ` 1,00,125/- and extra leave claimed by plaintiff is false; Plaintiff has received said benefit without protest; On these grounds amongst others raised in the written statement, defendant sought for dismissal of the suit. 8. On the basis of the pleadings of the parties trial Court framed following issues for its determination: 1. Whether the plaintiff proves that the calculation made by the defendant at the time of final settlement of accounts is erroneous and the defendant is still due in a sum of Rs.1,20,225/-? 2. Whether the plaintiff proves the liability of the defendant to pay the suit claim? 3. What order or decree?
10 9. Plaintiff got himself examined as P.W.1 and produced 16 documents and got them marked as Exhibits P-1 to P-16. On behalf of defendant company an Official from HRA department was examined as D.W.1 and three documents were produced and marked as Exhibits D-1 to D-3. Trial Court on evaluation of evidence and considering the pleadings of the parties, dismissed the suit, which is now assailed by the plaintiff in the present appeal. FINDINGS OF THE TRIAL COURT: 10. Insofar as claim of plaintiff towards recovery of three months pay is concerned, Trial Court has held that plaintiff has not produced any evidence to prove that he had issued three months prior notice to defendant company on his submission of resignation and as such he is entitled for said amount. Insofar as claim for payment of wages or salary of 246 days privilege leave to the credit of plaintiff is concerned, Trial Court held that no evidence is produced to show that as on 10.01.2000
11 plaintiff had 246 days privilege leave to his credit. On these grounds Trial Court has dismissed the suit of plaintiff. 11. In the background of rival contentions raised and evidence tendered by both the parties, it requires to be examined as to whether judgment of Trial Court is to be sustained as per the point formulated hereinabove or otherwise? RE: POINT NO.1 12. In the present suit the claim of plaintiff is two fold; 1. Privilege leave claim for 246 days on gross salary for a sum of `.90,525/-; (1,90,650-claimed, 1,00,125- paid) 2. Notice of pay (three months) of ` 23,250/-, which is based on gross salary; (claimed- 69,750, paid - 40,050) 13. Perusal of records would undisputedly indicate that defendant company has accepted, granted,
12 sanctioned and paid privilege leave to an extent of 225 days and a sum of ` 1,00,125/- is paid to plaintiff as per Ex.P.1 as against plaintiff claim for `.1,90,650/-. Thus, the difference is ` 90,525/-. Insofar as claim for notice period of resignation - 3 months is concerned the records would also indicate that defendant company has paid a sum of ` 40,050/- as per Ex.P.1 as against a claim of `.69,750/- and difference being `.23,250/-. Thus total difference is `.1,20,225/-. Plaintiff came to be relieved from his services on 10.01.2000. At the time of plaintiff being relieved from services a total sum of ` 1,47,675/- after TDS has been paid to plaintiff as evidenced from Exhibit P-1. A perusal of same would indicate that defendant has accepted the claim of defendant with regard to privilege leave of 225 days as against claim of 246 days. As already noticed hereinabove Trial Court dismissed the claim petition of plaintiff on the ground that no evidence was tendered by plaintiff to demonstrate or establish that plaintiff had 246 days privilege leave to his credit. Said finding is erroneous and contrary to
13 records and evidence available on records Exhibits P-11 and 12, which are the salary certificates issued by defendant company to plaintiff would clearly indicate that as on November and December 1999 plaintiff had 244 days of privilege leave to his credit. Two extra days which have been included in the plaint was for the period of 40 days namely 30 days in December 1999 and 10 days in January 2000 and as such finding of the Trial Court that plaintiff had not produced any evidence to show he had 244 days to his credit is contrary to records and evidence available on record and same is liable to be set aside. 14. At this juncture it would be appropriate to deal with the contention of learned counsel appearing for defendant namely defendant was entitled to a maximum accumulation of banked leave only for 90 days as per Clause 2 in the extant rules namely Exhibit P-13 and an employee will not be given at any one time privilege leave in excess of two years accumulation i.e., 30 days. Both these contentions are without merit and cannot be accepted for the reason that the extant regulations or
14 rules, which were governing the plaintiff and similarly placed employees of defendant company has been produced as per Exhibit P-13. clause 3 (c) reads as under: C. On retirement of an employee all banked/frozen leave along with current leave balance and accrued leave of financial year till date of relieving will be encashed. For the purposes of encashment Basic, DA & all monthly allowances (excluding vehicle costs & fuel expense if applicable) will be considered. Annual allowance like LTA Bonus, etc will not be considered. Above clause would clearly indicate that on retirement of an employee all banked / frozen leave along with current leave balance and accrued leave of financial year till date of relieving will be encashed and encashment would be based on all the components of salary namely basic pay, DA and monthly allowances (excluding vehicle costs and fuel expenses, if applicable). Said Clause namely Clause 3 (c), which came to be marked as Exhibit P-13 (a) would support the claim of plaintiff. If defendant had paid any excess privilege leave as contended by defendant s counsel not only before this Court but also before Trial
15 Court and prior to that at the time of issuing reply notice as per Exhibit P-10, nothing prevented defendant to set up a counter claim in the trial Court. For the reasons best known, they did not choose to do so. In fact, in the cross-examination dated 20.08.2008 of D.W.1, it is specifically admitted by D.W.1 to the following effect; I am working in the defendant company xxxxxxx in writing. Now I se a document which is personal policy leave rules staff members and the same belongs to the defendant company. The same is marked as Ex.P13. The relevant portion in Ex.P13 is marked as Ex.P13(a). It is true to suggest that Exc.P13 as in existence till 1999. The said policy which is at Ex.P13 was renewed subsequently and the policy now shown to me is the renewed policy incorporating the changed terms and conditions and it is marked as Ex.p14. It is true to suggest that in Ex.P14 at clause 3 (c) for the purpose of encashment, basic, DA and all monthly allowances (excluding vehicle cost and fuel expenses if applicable) will be considered. The relevant portion is marked at Ex.P14(a). 15. Insofar as leave encashment is concerned under Exhibit P-14(a) it is only the basic salary which would be considered. Exhibit P-14 came to be issued on 01.08.2000 retrospectively to be in force from 10.01.2000
16 onwards. As to whether this Exhibit P-14 can be made applicable to plaintiff would be the question and the answer necessarily has to be in the negative for the reason by the time Exhibit P-14 was issued plaintiff had already been relieved undisputedly on 10.01.2000 by which time Exhibit P-14 had not come into existence and as such, same cannot be applied to plaintiff under its leave rules, which is enumerated in Exhibit P-13 which would govern the plaintiff, which would clearly indicate that an employee on retirement will be entitled to encash all banked / frozen leaves along with current leave balance and accrued leave and for the purpose of calculation of said encashment, the components of basic pay, DA and all monthly allowances (including vehicle cost and fuel expenses, if applicable) would be considered even according to the defendant and as such, Trial Court was not justified in rejecting the claim of plaintiff. 16. Yet another reason which requires to be noticed by this Court is the fact that defendant having taken a stand in the written statement that plaintiff
17 would be entitled only for 90 days encashment leave or 30 days, did not file any counter claim and it also gave a complete go by to its own document Exhibit P-1, whereunder defendant has recognised or accepted the claim of plaintiff for grant of privilege leave and has in fact accepted the plaintiff s claim to an extent of 225 days and granted the same. In other words plaintiffdefendant itself recognised the right of plaintiff is traceable to the extant rules as governed under Exhibit P-13 and not under Exhibit P-14 and as such it settled the claim of plaintiff for 225 days. If really rules under Exhibit P-14 was governing the plaintiff defendant would have rejected claim for 225 days and would have settle the claim for 90 days for 30 days only. In that view of the matter, finding of Trial Court denying the claim of plaintiff cannot be sustained. Insofar as denial for difference in the amount to which plaintiff would be entitled for privilege leave is concerned would be ` 90,525/- (` 1,90,650 ` 1,00,125/-) to which plaintiff is entitled to.
18 17. Insofar as the second claim is concerned i.e., with regard to notice of pay for three months is concerned, it does not detain this Court for long by allowing the appeal in favour of plaintiff by answering the claim of plaintiff for simple reason that defendant themselves have accepted that plaintiff is entitled for three months notice pay. It is not doubt true that plaintiff did not produce office copy or the copy retained by him for having submitted his resignation letter. When defendant raised a plea about the said notice not being in accordance with extant rules or otherwise namely three months notice having not been given, nothing prevented defendant from producing the same since undisputedly it was in defendant s custody. This exercise was not undertaken by defendant and as such, an adverse inference ought to have been drawn by Trial Court. 18. Be that as it may. Defendant themselves have accepted that plaintiff is entitled for three months notice of pay and as such defendant has paid a sum of
19 ` 40,050/- as per Exhibit P-1. In other words defendant unequivocally admits that plaintiff is entitled for three months wages. However, it has calculated the wages by taking into consideration only the basic pay and in view of the fact that extant rules as found in Exhibit P-13 would govern the claim of plaintiff and he would be entitled for the suit claim. Rejection of claim of plaintiff for difference in payment i.e., ` 29,700/- by the Trial Court as such is erroneous and cannot be sustained. Hence, Point No.1 requires to be answered in favour of plaintiff - appellant and against defendant-respondent. RE POINT NO.2: 19. For the reasons aforestated, following order is passed: ORDER i. Appeal is hereby allowed with cost. ii. Judgment and decree passed by XXX Addl. City Civil Judge, Bangalore, in O.S.No.7740/2000 dated 04.08.2009, is hereby set aside and suit of plaintiff is decreed for sum of ` 1,20,225/- with
20 interest at 6% p.a. from the date of suit till date of payment or deposit, whichever is earlier. iii. iv. Registry to draw the decree accordingly. Appellant - plaintiff is entitled for refund of court fee. Registry is hereby directed to refund the admissible court fee forthwith. Sd/- JUDGE DR