Issac C.V. v. Kerala State Financial Enterprises Ltd.

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT:** ## **THE HONOURABLE MR.JUSTICE C.K.ABDUL REHIM** ## **FRIDAY, THE 30TH DAY OF AUGUST 2013/8TH BHADRA, 1935** **WP(C).No. 34192 of 2009 (T)** **----------------------------** **PETITIONER(S): --------------------------** **ISSAC.C.V.,AGED 61 YEARS, S/O.VARGHESE, CHANDANAPARAMBIL HOUSE, KOONAMMAVU P.O., KOTTUVALLY VILLAGE, PARAVOOR TALUK, ERNAKULAM DISTRICT, PIN-683 518, CHIEF MANAGER (RETIRED), KERALA STATE FINANCIAL ENTERPRISES LIMITED (LOAN UNIT ERNAKULAM).** **BY ADVS.SRI.C.S.AJITH PRAKASH SRI.T.D.SALIM SRI.PAUL C. THOMAS** **RESPONDENT(S):** **----------------------------** **1. KERALA STATE FINANCIAL ENTERPRISES LTD., 'BHADRATHA', THRISSUR, PIN-680 020, REPRESENTED BY ITS MANAGING DIRECTOR.** **2. THE MANAGING DIRECTOR, KERALA STATE FINANCIAL ENTERPRISES LTD., 'BHADRATHA', THRISSUR, PIN-680 020.** **R1 & R2 BY ADVS. SRI.E.K.NANDAKUMAR,SC, KSFE LTD. SRI.A.K.JAYASANKAR NAMBIAR SRI.K.JOHN MATHAI SRI.P.BENNY THOMAS SRI.P.GOPINATH SRI.V.J.ANAND** **THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 30-08-2013, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** **Kss** ## **WPC.NO.34192/2009 (T)** ## **APPENDIX** ## **PETITIONER'S EXHIBITS:** - **P1: COPY OF THE REPLY GIVEN BY RESPONDENT DTD. 07/04/2008.** - **P2: COPY OF THE LETTER DTD. 5/09/2008 ISSUED BY THE 1ST RESPONDENT.** - **P3: COPY OF DISABILITY CERTIFICATE ISSUED BY DRT.U.S.BABU, ORTHOPEDIC SURGEON, DTD. 19/10/1995.** - **P4: COPY OF THE REPRESENTATION DTD. 29/01/2009.** - **P5: CERTIFICATE ISSUED BY DR.JOSE ZACHARIAA OF VARAPUZHA MEDICAL CENTRE AND RESEARCH CENTRE FOR SPORTS INJURIES DTD. 27/05/2010.** ## **RESPONDENT'S EXHIBITS:** - **R1(A): COPY OF ORDER DTD. 04/03/2009 PASSED BY THE AUTHORITY IN G.C.NO.101/2008.** **R1(B): COPY OF ORDER DTD. 10/07/2009 PASSED BY LOK AYUKTA.** **/TRUE COPY/** **P.A.TO JUDGE** **Kss** ## **C.K. ABDUL REHIM, J.** **- - - - - - - - - - - - - - - - - - - - - - - W.P.(C)No.34192 of 2009 - - - - - - - - - - - - - - - - - - - - - - - Dated this the 30[st ] day of August, 2013** ## **J U D G M E N T** The petitioner retired from service of the 1[st] respondent on 31.03.2007, while officiating as Chief Manager. The petitioner had completed lengthy service of more than 34 years in the 1[st] respondent organisation. Benefits of terminal leave surrender as well as death cum retirement gratuity (DCRG) were not paid to the petitioner within any reasonable time after retirement. Ext.P1 reply was issued to the requests made by him, stating that the benefit of terminal surrender amounting to Rs.2,92,935/and an amount of Rs.1,35,000/- from the DCRG is withheld and will be released only on finalisation of a dispute pending with respect to a 'Special Car Loan' sanctioned to one Sri. Lawrence Joseph, while the petitioner was working as Unit Head, Loan Unit, Ernakulam. Ext.P2 is a W.P.(C)No.34192 of 2009 **-2-** subsequent letter issued by the 1[st] respondent intimating that the Board of Directors of the 1[st] respondent have authorised the 2[nd] respondent to deduct a sum of Rs.1,43,750/- from eligible amounts of terminal surrender of earned leave. In Ext.P2 it is explained that the amount of Rs.1,43,750/- is fixed as liability on the basis that the petitioner had sanctioned the loan to the extent of Rs.75,000/- in excess of the allowable advance limit. It was also decided to deduct a further amount of Rs.68,750/being 25% of the allowable advance of Rs.2,75,000/sanctioned, based on principles adopted by the Board in relation to payment of terminal benefits of Managers in whose career there are only few cases of lapses in acceptance of property as security. 2. On receipt of Ext.P2 the petitioner submitted Ext.P4 representation before the 2[nd] respondent requesting to release the amount withheld. It was explained that before sanctioning the loan the petitioner had forwarded the entire file to the Regional Manager and instruction was W.P.(C)No.34192 of 2009 **-3-** received to sanction the loan from the unit. It is further mentioned that the car loan was sanctioned after obtaining hypothecation from the Regional Transport Office and after obtaining six cheques from the loanee including one blank cheque. It was also pointed out that revenue recovery steps as well as cheque cases were initiated against the loanee, and such steps are still pending. The petitioner also pointed out that he met with an accident and is undergoing treatment, for which there is urgent need of money. Since no further action was taken on the basis of Ext.P4 this writ petition is filed. 3. In the counter affidavit filed on behalf of the respondents it is contended that as Assistant Chief Manager of the company, the petitioner was authorised to sanction car loan only upto Rs.2,75,000/-. But the petitioner had sanctioned the loan to the tune of Rs.3,50,000/-. Since action on the part of the petitioner had caused heavy loss and damage to the company it was decided to recover a sum of Rs.1,35,000/- from the gratuity and Rs.2,92,935/- W.P.(C)No.34192 of 2009 **-4-** from the leave surrender. But the management took a lenient view on the basis of request made by the petitioner and limited the amount of recovery at Rs.1,43,750/-. Sum and substance of the contention is that the petitioner had sanctioned the car loan exceeding his limits and hence the amount is liable to be recovered from his retirement benefits. It is also pointed out that the petitioner had not pursued any challenge against the decision of the Lok Ayukta and he has not approached the Controlling Authority Under The Payment of Gratuity Act, 1972. 4. In the reply affidavit the petitioner had specifically pointed out that, the loan in question was sanctioned as a special case and the petitioner had forwarded the entire files to the Regional Manager, who is the superior officer. It is also mentioned that the petitioner had taken all possible legal steps to recover the amount from the loanee, during the period when he was in service. 5. Issue arising for consideration is as to whether the recovery from the terminal leave surrender is W.P.(C)No.34192 of 2009 **-5-** sustainable or not. Stand taken in the counter affidavit is that the action of the petitioner had caused heavy loss and damage to the 1[st] respondent and therefore the management had an option to take disciplinary action against the petitioner. But considering the fact that he was due to retire, the recovery was decided to be effected. Prime question arising for consideration is as to whether the loan amount can be recovered from the petitioner, even assuming that he had sanctioned loan in excess of the limits prescribed. Further question is as to whether any amount can be recovered from the officers sanctioning the loans, on the ground that the organisation could not realise or recover the loan amounts from the loanees for one or another reason. 6. In the case at hand it is evident from a statement filed on behalf of the respondents that the car in question was irrecoverably lost due to theft and the respondents were not in a position to realise compensation from the Insurance Company, because no police case was registered W.P.(C)No.34192 of 2009 **-6-** regarding the theft. But nothing is indicated to the effect that there was any laches on the part of the petitioner in causing the loss due to theft of the vehicle. Nothing is also indicated to the effect that any legal steps has been taken by the respondents for realising the amount from the loanee. Hence this court is of the opinion that no recovery can be effected from the petitioner merely because it could not be recovered from the loanee. 7. In the case at hand specific allegation is that the loss was caused because the petitioner had sanctioned the loan exceeding his limits. Question is as to whether the liability was fixed on the petitioner in a proper manner. Nothing has been produced from the side of the respondents to show that any notice was issued enumerating the reasons for the proposed recovery. No adequate opportunity was afforded to the petitioner to object any such proposal. No adjudication is seen done before fixing such liability on the petitioner. Both counsel for the petitioner as well as the counsel appearing for the W.P.(C)No.34192 of 2009 **-7-** respondents are not in a position to point out as to what exactly is the relevant provisions of law governing service conditions of the petitioner. Whatever that be, adherence of principles of natural justice is mandatory in fixing such liability. Learned counsel for the petitioner relied on a decision of the Hon'ble apex court in **Union of India v. Natarajan [2010 (2) KLT 743 (SC)]** . It is held therein that retiral benefits payable to an employee could not be revised to their disadvantage without giving him action oriented notice and opportunity of hearing. The rule of 'audi alteram partem' has been treated as fundamental to the system established by rule of law and any action taken or order passed without complying with that rule is liable to be declared void, is the finding. 8. As the impugned recovery is effected without adherence to any of the principles as enumerated above and without there being any adjudication with opportunity afforded to the petitioner, the decision taken by the 1[st] respondent as enumerated in Ext.P2 cannot be W.P.(C)No.34192 of 2009 **-8-** sustained. Therefore I am of the opinion that the writ petition succeed and Ext.P2 is liable to be quashed. Learned counsel for the petitioner pressed for relief to the extent of directing payment of the amounts withheld, within a time limit. I am inclined to order such relief only subject to liberty reserved in favour of the respondents to take any fresh decision, if sustainable under law and under the relevant provisions governing service conditions, after adhering to all procedures and principles of natural justice. However I am not inclined to permit the respondents to keep the matter indefinitely. 9. Therefore the writ petition is allowed and Ext.P2 is hereby quashed. A time limit of two months from the date of receipt of a copy of this judgment is fixed for payment of the amounts withheld under Ext.P2, unless any fresh decision is taken in accordance with law, for recovery of the amount from the terminal benefits due to the petitioner, taking note of the observations contained herein above. W.P.(C)No.34192 of 2009 **-9-** Needless to observe that the petitioner will be at liberty to raise all available contentions against such proceedings if any initiated and he will be also at liberty to challenge adverse decision if any taken in this regard. Sd/- **C.K. ABDUL REHIM,** ## **JUDGE** //True copy// P.A. TO JUDGE Shg/