Jacob John v. Kerala State Civil Supplies Corporation Ltd.

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** **THE HONOURABLE MRS. JUSTICE ANU SIVARAMAN** **THURSDAY, THE 14TH DAY OF MARCH 2019 / 23RD PHALGUNA, 1940** ## **WP(C).No. 32677 of 2011** ## **PETITIONER/S:** **JACOB JOHN, AGED 62 YEARS S/O.P.C.JOHN, HOUSE NO.V/463 A, UNICHIRA THOPPIL ROAD, THRIKKAKARA.P.O., KOCHI-682 021.** **BY ADVS. SRI.C.K.GOVINDAN SRI.L.P.ARAVINDAKSHAN** ## **RESPONDENT/S:** **1 KERALA STATE CIVIL SUPPLIES CORPN. LTD. LTD., REPRESENTED BY THE MANAGING DIRECTOR,, MAVELI BHAVAN, MAVELI ROAD, GANDHI NAGAR,, KOCHI-682 020. 2 ADDITIONAL GENERAL MANAGER (P AND A), KERALA STATE CIVIL SUPPLIES CORPORATION LTD., MAVELI BHAVAN, MAVELI ROAD, GANDHI NAGAR, KOCHI-682 020.** **BY ADVS. SMT.MOLLY JACOB,SC,SUPPLYCO SHRI N.D.PREMACHANDRANSCSUPPLYCO SMT.MOLLY JACOBSCSUPPLYCO SRI.LAKSHMI NARAYAN, SC, SUPPLYCO** **THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 14.03.2019, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** **WP(C).No. 32677 of 2011** **2** ## **JUDGMENT** This writ petition is filed seeking directions to the respondents to disburse all monetary benefits due to the petitioner within a time frame. 2. It is submitted that the petitioner was working as Manager (Quality Control) under the first respondent Corporation. He was terminated from service by proceedings dated 27.4.2006. It is stated that benefits such as salary, increment arrears, service gratuity, leave salary, festival Ex-gratia etc., were not paid to the petitioner. The petitioner had submitted Ext.P10 application dated 31.5.2010. It is sated that Ext.P11 reply had been given to the petitioner stating that since the petitioner had been dismissed from service, he is not entitled to gratuity. The petitioner had submitted an application under the RTI Act, which was replied to by Ext.P13 by the respondents stating that the gratuity of a terminated employee can be forfeited for the extent of loss or damage caused and since liabilities are outstanding **WP(C).No. 32677 of 2011** **3** against the petitioner, gratuity cannot be disbursed. 3. It is stated that as disciplinary cases are outstanding, in which total liability of Rs.43.37 crores is pending to be recovered, the pay revision arrears and other benefits cannot be disbursed. Ext.P13 also states that payment of surrender leave salary is limited to those employees, who retired on superannuation or died in service and therefore the said amount cannot be released. It is stated that the petitioner has suffered a penalty of bar of increment for two years without cumulative effect by proceedings dated 24.3.1998 and that the value of the said increment cannot be released. It is stated that the period of suspension from 17.5.1999 to 5.2.2002 was treated as leave without allowance and during the said period also the increment cannot be sanctioned. With regard to the payment of festival Ex-gratia for the year 2005-06, it is sated that since liabilities are pending against the petitioner, the said amounts also cannot be disbursed. 4. The learned counsel for the petitioner would **WP(C).No. 32677 of 2011 4** contend that the gratuity due to the petitioner was liable to be paid in terms of the Payment of Gratuity Act, 1972 (hereinafter referred to as 'the Act'). Referring to Section 4 of the Act, it is contended that gratuity becomes payable to an employee on the termination of his employment after he rendered continuous service for not less than five years. 5. A reply affidavit has also been placed on record. It is stated that the only provisions for forfeiture of gratuity are under Sub Section 6 (a) and 6 (b) of Section 4. Sub Section (6) of Section 4 of the Act reads as follows: “(6) Notwithstanding anything contained in sub-section (1),- (a) the gratuity of an employee, whose services have been terminated for any act, willful omission or negligence causing any damage or loss to, or destruction of, property belonging to the employer, shall be forfeited to the extent of the damage or loss so caused; (b) the gratuity payable to an employee (may be wholly or partially forfeited) (i) if the services of such employee have been terminated for his riotous or disorderly conduct or any other act of violence on his part, or (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. **WP(C).No. 32677 of 2011 5** 6. It is contended by the learned counsel for the petitioner that no amount has been assessed by the respondents as loss caused by the petitioner. It is further contended that the dismissal of the petitioner is not on account of his conduct, which amounts to moral turpitude. Relying on the decision of this Court in _**Dhanalakshmi Bank Ltd. v. Ramachandran (2012(2)KLT 170),**_ the learned counsel would contend that before forfeiting any amount of gratuity under Section 4(6) of the Act, the petitioner would be entitled to a notice and a hearing as to whether there is any loss caused by the petitioner. It is contended that it is only on a finding of loss, after due notice that the gratuity can be forfeited. Relying on the provisions of the statute as also the decisions of the Apex Court in _**Union Bank of India and others v. Ajay Babu, C.G and another (I.L.R 2018(3) Kerala 709),**_ it is also contended that the finding of moral turpitude has to be entered by a Court of law and a finding by the employer by itself in a disciplinary proceedings would not be enough to forfeit gratuity under Section 4(6)(b). 7. A detailed counter affidavit has been placed on **WP(C).No. 32677 of 2011** **6** record by respondents 1 and 2. The learned Standing Counsel appearing for the respondents would contend that several proceedings had been taken against the petitioner with regard to his involvement in the acceptance of inferior quality of stock supplied by a specific supplier. It is stated that huge loss had occurred to the respondents on account of the illegal act committed by the petitioner and that by Ext.R3 proceedings dated 27.4.2006, the petitioner had been dismissed from service for his involvement in the said activity. It is stated that the proceedings for quantification of the loss caused to the Corporation is still pending and that the amounts due to the petitioner as gratuity and other service benefits cannot be disbursed to him, in view of the fact that he has caused such loss. 8. I have considered the contentions advanced. The right to gratuity is a statutory right which accrues on the strength of the provisions of the Payment of Gratuity Act, 1972. It is a deferred payment for the services rendered by an employer. The forfeiture of any amount from the gratuity can only be in accordance **WP(C).No. 32677 of 2011 7** with the specific provisions with regard to such forfeiture as found in Sub Section (6) of Section 4 of the Act. Sub Sections 6 (a) and 6 (b) provide the specific instances in which gratuity of an employee can be forfeited. In the instant case, the contention of the respondents is that the petitioner had caused loss to the employer and therefore no amount can be paid to the petitioner as gratuity since the loss caused by him exceeds the gratuity payable to him. 9. The learned counsel for the petitioner submits that all other persons, whose involvement in the offence were suspected and had been absolved had been granted promotion as well. The learned counsel for the petitioner would further contend that there was no proceedings assessing any loss caused by the petitioner to the respondent Corporation and that in the absence of any such quantification of loss, no amount can be found due from the petitioner. The learned counsel for the petitioner would also contend that proceedings had been initiated against several other employees and officials of the Corporation, with regard to the specific instance, on which the petitioner had been **WP(C).No. 32677 of 2011** **8** dismissed from service. It is therefore contended that even in case any loss is assessed, without a specific finding as to the loss caused personally by the petitioner, no steps for forfeiting the gratuity can be taken against him. 10. The petitioner is a person, who is being dismissed from service on 27.4.2006. He had admittedly worked in the Corporation from 16.8.1984 to the date of his dismissal. While passing orders of dismissal, no forfeiture of gratuity was effected with notice to the petitioner. The dismissal from service is apparently on finding that the grievous allegations against the petitioner stand proved. However, the Apex Court in _**Union Bank of India and others Vs. Ajay Babu, C.G and**_ _**another (ILR 2018 (3) Kerala 709),**_ has held that gratuity cannot be forfeited unless the employee is found guilty by a court of law of an offence involving moral turpitude. The Apex Court has clearly held as follows: “18. . . . . . . . Apart from the disciplinary proceedings initiated by the appellant-Bank, the Bank has not set the criminal law in motion either by registering an FIR or by filing a criminal complaint so as to establish that the misconduct **WP(C).No. 32677 of 2011** **9** leading to dismissal is an offence involving moral turpitude. Under sub-section (6)(b)(ii) of the Act, forfeiture of gratuity is permissible only if the termination of an employee is for any misconduct which constitutes an offence involving moral turpitude, and convicted accordingly by a court of competent jurisdiction. 19. . . . . . . . . . . . . 20. In the present case, there is no conviction of the respondent for the misconduct which according to the Bank is an offence involving moral turpitude. Hence, there is no justification for the forfeiture of gratuity on the ground stated in the order dated 20.4.2004 that the “misconduct proved against you amounts to acts involving moral turpitude”. At the risk of redundancy, we may state that the requirement of the statute is not the proof of misconduct of acts involving moral turpitude but the acts should constitute an offence involving moral turpitude and such offence should be duly established in a court of law. 21. That the Act must prevail over the Rules on Payment of Gratuity framed by the employer is also a settled position as per **Jaswant Singh Gill** (supra). Therefore, the appellant cannot take recourse to its own Rules, ignoring the Act, for denying gratuity. 22. To sum-up, forfeiture of gratuity is not automatic on dismissal from service; it is subject to sub-sections (5) and (6) of Section 4 of the Payment of Gratuity Act, 1972.” ## 11. In _**Dhanalakshmi Bank Ltd. v. Ramachandran**_ _**(2012(2) KLT 170)**_ , the Division Bench of this Court has held thus: 9. It is relying on the second limb of clause (b) of sub-s.(6) of S.4 that the petitioner contends that the gratuity payable to the first respondent stood forfeited for the reason that his service was terminated for the commission of the an offence involving moral turpitude. From the pleadings and the contentions advanced before me it is evident that it is relying on the order imposing the punishment of **WP(C).No. 32677 of 2011** **10** dismissal from service which was affirmed by Ext.P1 order passed by the appellate authority that the petitioner has taken the stand that the gratuity payable to the first respondent stands forfeited. The petitioner has no case that an order forfeiting the gratuity payable to the first respondent was passed after notice to him simultaneous with the order dismissing him from service or at any time thereafter. The order passed by the disciplinary authority dismissing the first respondent from service has also not been placed on record. In any case, the petitioner has no case that an order forfeiting the gratuity was passed along with the order dismissing the first respondent from service. **==> picture [181 x 61] intentionally omitted <==** 13. In the instant case the petitioner has no case that an order forfeiting the gratuity had been passed with notice to the employee. The petitioner has also no case that an order forfeiting the gratuity had been passed even initially while dismissing the employee from service. In other words the petitioner has not established the fact that an order forfeiting the whole of the gratuity payable to the first respondent after putting him on notice, I hold following the principles laid down in the decisions referred to above that the direction issued by the appellate authority under the Act in Ext.P6 order does not merit interference. 12. Though it is contended that gratuity cannot be released since the petitioner has caused loss, without a specific order quantifying the loss caused by the individual employee, there can be no forfeiture of liability in terms of Section 4(6)(a) of the Payment of Gratuity Act. Since there is no such quantification of any loss caused by the petitioner, the forfeiture of **WP(C).No. 32677 of 2011** **11** the petitioner's gratuity without any finding of loss caused by him is completely unwarranted. 13. The writ petition is therefore ordered, directing release of the gratuity amount due to the petitioner. In respect of the other amounts due to the petitioner, the issue has to be reconsidered in view of the fact that no loss has been found or quantified as against the petitioner. In the result, Ext.P11 is set aside. There will be a direction to the respondents to take up Ext.P10 representation and pass appropriate orders on the same, taking note of the finding that no loss has been assessed or found against the petitioner till date. Orders shall be passed on Ext.P10, within a period of three months from the date of receipt of a copy of this judgment. The amount of gratuity found due will be released with statutory interest to the petitioner, within a period of one month from the date of receipt of a copy of this judgment. **Sd/-** sab ## **ANU SIVARAMAN, JUDGE** **WP(C).No. 32677 of 2011** **12** ## **APPENDIX** **PETITIONER'S/S EXHIBITS: EXHIBIT P1 COPY OF PAY REVISION ORDER DATED 29/06/199. EXHIBIT P2 COPY OF PROCEEDINGS DATED 18/01/2006. EXHIBIT P3 COPY OF PROCEEDINGS DATED 26/07/2006. EXHIBIT P4 COPY OF REPRESENTATION DATED 22/05/2006 ISSUED BY THE PETITIONER TO 1ST RESPONDENT. EXHIBIT P5 COPY OF REMINDER DATED 28/07/2006. EXHIBIT P6 COPY OF REMINDER DATED 28/08/2006. EXHIBIT P7 COPY OF LETTER DATED 11/04/2007. EXHIBIT P8 COPY OF POSTAL RECEIPT DATED 13/04/2007. EXHIBIT P9 COPY OF ACKNOWLEDGMENT CARD. EXHIBIT P10 COPY OF THE APPLICATION DATED 31/05/2010. EXHIBIT P11 COPY OF THE REPLY LETTER DATED 21/10/2010. EXHIBIT P12 COPY OF THE APPLICATION FILED UNDER RIGHT TO INFORMATION ACT. EXHIBIT P13 COPY OF THE REPLY SENT BY THE PUBLIC INFORMATION OFFICER. RESPONDENT'S/S EXHIBITS: EXHIBIT R1** THE TRUE COPY OF THE PROCEEDINGS DATED 18/10/2005. **EXHIBIT R2** THE TRUE COPY OF THE MEMO CHARGES DATED 18/10/2005. **EXHIBIT R3** THE TRUE COPY OF THE PROCEEDINGS DATED 27/04/2006. **EXHIBIT R4** THE TRUE COPY OF THE PROCEEDINGS DATED 17/05/1999. **EXHIBIT R5** THE TRUE COPY OF THE PROCEEDINGS DATED 24/03/1998 **EXHIBIT R6** THE TRUE COPY OF THE PROCEEDINGS DATED 07/10/1999. **EXHIBIT R7** THE TRUE COPY OF THE PROCEEDINGS DATED 05/02/2002.