S. Sudeep Kumar v. National Insurance Company Ltd.

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** ## **THE HONOURABLE MR. JUSTICE AMIT RAWAL** **THURSDAY, THE 2[ND] DAY OF MARCH 2023 / 11TH PHALGUNA, 1944** ## **WP(C) NO. 10980 OF 2010** ## **PETITIONER:** S.SUDEEP KUMAR S/o.SANKARAN, AGED 57 YEARS RESIDING AT 'SUSHA', 1/1433, EAST HILL, CALICUT – 673005. BY ADVS. SRI.E.K.NANDAKUMAR (SR.) SRI.V.J.ANAND SRI.P.BENNY THOMAS SRI.P.GOPINATH SRI.A.K.JAYASANKAR NAMBIAR SRI.K.JOHN MATHAI ## **RESPONDENTS:** 1 NATIONAL INSURANCE COMPANY LTD. HEAD OFFICE 3, MIDDLETON STREET, KOLKATTA -700071, REPRESENTED BY ITS CHAIRMAN. 2 CHIEF REGIONAL MANAGER NATIONAL INSURANCE COMPANY LTD., KOCHI REGIONAL OFFICE, IST AND 2ND FLOORS, OMANA BUILDINGS, JEWS STREET, PADMA JUNCTION, COCHIN -35. 3 GENERAL MANAGER (PERSONNEL), NATIONAL INSURANCE COMPANY LTD, HEAD OFFICE : 3, MIDDLETON STREET, KOLKATA - 700 071. BY ADV SRI.P.K.MANOJKUMAR THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 02.03.2023, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: WP(C)No.10980/2010 2 ## **JUDGMENT** ## Petitioner has approached this Court with the following ## prayers : “i. Call for the records leading to Ext.P9 order and to quash the same by the issue of a writ of certiorari ; ii. to declare that the policy of the respondent company to deny the benefit of earned leave encashment and extended Medical Insurance to families of employees like the petitioner is illegal and violative of Article 14 of the Constitution of India ; iii. issue a writ of mandamus or any other appropriate writ, order or direction, directing the respondents to disburse the amount due to the petitioner by way of earned leave encashment, loss due denial of extended medical insurance facility to the petitioner and to refund the amount deducted towards shortfall in notice period ; iv. “c)(i) To declare that the termination of services of the petitioner, in essence, was voluntary retirement and that the petitioner is entitled for pensionary benefits under the 1995 Pension Scheme provided he fulfills the condition of refunding of the entire amount of the Corporation's contribution to the provident fund along with interest accrued thereon ; v. c) ii) To issue a writ of mandamus or any other appropriate writ, order or direction, directing the respondents to disburse benefits of arrears of pension payable from the date of resignation in accordance with the application rules.” vi. grant such other reliefs as this Hon'ble Court may deed fit and proper in the facts and circumstances of this case.” WP(C)No.10980/2010 3 2. Before commencement of the arguments, learned senior counsel Sri.E.K.Nandakumar appearing on behalf of the petitioner at the outset submitted that he would not be pressing relief No.(i) and confined to relief Nos.(ii) and (iii). Keeping in view the aforementioned prayer, the facts pertaining to those prayers only would be referred to in the finding of mine. 3. The petitioner joined the National Insurance Company as Assistant Administrative Officer, on 01.07.1986. After having rendered 21 years of service, submitted advance notice of resignation on 02.04.2007 which was accepted by the respondent vide Ext.P2 dated 04.07.2007 with effect from 01.06.2007. It is contended that the petitioner during the service had not availed the leave encashment but earned to his credit and thus, at the time of settlement of the dues, was entitled to the leave encashment. However the respondents denied the same by relying upon paragraphs Nos.4 and 5 of the General Insurance (Termination, Superannuation and Retirement of Officers and Development Staff) Scheme, 1976. Provisions of the aforementioned Scheme do envisage the availment of leave encashment at the time of retirement with a caveat that a person would not leave the Insurance Company without giving the advance notice in writing, of WP(C)No.10980/2010 4 three months. The notice of the petitioner pertains to a period of two months which has been accepted on 01.06.2007 without any condition or stipulation. The action of the respondents in not releasing the leave encashment which is a part of the salary is wholly abberrative, fallacious and contumacious. In support of the aforementioned contention, petitioner relied upon the judgment of Supreme Court in **Jagdish Prasad Saini and others v. State of Rajasthan and others** _[JT 2022 (10) SC 60]_ . 4. On the other hand, learned counsel appearing on behalf of the respondents submitted that the provisions of the Scheme are unambiguous and do not require any interpretation, for, the persons falling in paragraphs 4 and 5 of the Scheme would not be eligible for leave encashment. The petitioner since had left the job by submitting the resignation, therefore, would be excluded from the applicability of the provisions sub-paragraph (5) of paragraph 4 of the Scheme. 5. I have heard the counsel for the parties and appraised the paper book. 6. sub-paragraph (5) Paragraph 4 and paragraph 5 of the Scheme read as under : WP(C)No.10980/2010 5 ## _“_ _**(4) Superannuation and retirement** :-_ _(1) A transferred Officer or a person of the transferred Development Staff shall retire on the afternoon of the last day of the month in which he attains the age of 60 years._ **==> picture [110 x 8] intentionally omitted <==** _(4) Nothing contained in the foregoing sub-paragraph shall affect the right of the appointing authority:-_ _(a) to retire, remove or dismiss an officer or a person of the Development Staff in accordance with the provisions of the Conduct, Discipline and Appeal Rules framed by the Corporation or the Company, as the case may be, in respect of its employees;_ _(b) to terminate the Service of a person of the Development Staff in accordance with the provisions of sub-paragraph (3) of paragraph (5) or paragraph 11 of the General Insurance (Rationalisation of Pay Scales and Other Conditions of Service of Development Staff) Scheme, 1976;_ _(c) to retire an officer or a person of the Development Staff without notice or pay in lieu thereof on his being certified by a medical examiner, to be nominated for the purpose by the appointing authority, as being incapacitated for further continuous service either due to continued illness or accident;_ _Provided that if an officer or a person of the Development Staff has earned leave to his credit and he avails of such earned leave from the date such decision to retire him under this sub-paragraph is communicated to him, he will be permitted to avail of the full earned leave to his credit, in which event his retirement shall take effect from the date of expiry of such leave._ _(d) In respect of the Chairman-cum-Managing Director of the Corporation and the Chairman-cum-Managing Director of a Subsidiary Company, the appellate authority and the reviewing authority shall be the Central Government._ _(4A) Notwithstanding anything contained in the foregoing sub-paragraphs, an officer or a person of the Development Staff may be permitted, subject to vigilance clearance to seek voluntary retirement._ _(a) On completion of 55 years of age or at any time thereafter on giving ninety days notice in writing to the appointing authority of his intention to retire._ _Provided that on a written request from an officer or a_ WP(C)No.10980/2010 6 _person of the Development Staff such notice may be waived in full or in part by the appointing authority, or (b) in accordance with the provisions contained in paragraph 30 of the General Insurance_ (Employees) Pension Scheme, 1995, made under Section 17A of the General Insurance Business (Nationalisation) Act, 1972, (57 of 1972) and published under Notification of the Government of India, in the Ministry of Finance (Department of Economic Affairs) Insurance Division No.S.O.585 (E) dated 28 June, 1985. _(5) (a)When an Officer or a person of the Development Staff has earned leave to his credit according to the rules framed by the Corporation of the Company but has not availed of the same till the date of retirement, he may be paid cash equivalent of leave salary in respect of the period of earned leave at his credit as on the date of retirement, subject to a maximum of 240 days._ _Provided that this paragraph shall not apply to an Officer or a person of the Development Staff referred to in sub-paragraph (4) of this Paragraph and those referred to in paragraph 5 below._ _NOTE 1: The cash equivalent of leave salary shall be paid in one lumpsum as on time settlement_ _NOTE 2: Leave salary for the purpose of this paragraph shall be equal to the salary for such leave standing to his credit calculated at the rate at which he drew salary immediately preceding the date of his retirement but excluding City Compensatory Allowance, House Rent Allowance and functional allowance._ _NOTE 3. The authority to grant cash equivalent of leave shall be an officer competent to grant earned leave to the person concerned._ _(b) Where an Officer or a person of the Development Staff who had proceeded on leave preparatory to retirement before the commencement of this Scheme and was allowed to return to duty subsequently, he may be paid cash equivalent of leave salary as admissible in terms of clause (a) of this sub-paragraph._ _(c) An Officer or a person of the Development Staff may avail as leave preparatory retirement, a part of the earned leave to his credit in which case the cash equivalent of leave salary shall be allowed in respect of unavailed part of the earned leave due to him as on the date of retirement in terms of clause (a) of this subparagraph.”_ WP(C)No.10980/2010 7 ## _-_ _**“(5) Determination of Service:**_ _(1) An officer or a person of the Development Staff, other than one on probation, shall not leave or discontinue his Service without first giving notice in writing to the appointing authority of his intention to leave or discontinue the Service and the period of notice required to be given shall be three months ;_ _Provided that such notice may be waived in part or in full by the appointing authority at its discretion._ _**Explanation I** : In this Scheme, month shall be reckoned according to the English calendar and shall commence from the day following that on which the notice is received by the Corporation or the Company, as the case may be;_ _**Explanation II** : A notice given by an officer or a person of the Development Staff under this Paragraph shall be deemed to be proper only if he remains on duty during the period of notice and such officer or person shall not be entitled to set off any leave earned against the period of such notice. (2) In case of breach by an officer or a person of the Development Staff of the provisions of sub-paragraph (1) he shall be liable to pay to the Corporation of the Company concerned, as the case may be as compensation a sum equal to his salary for the period of notice required of him which sum may be deducted from any monies due to him.”_ On perusal of the above, it is evident that an officer or a person who has earned the leave to his credit according to the rules framed by the co-operation of the Company, but had not availed the same till the retirement would be paid a cash equivalent to the leave salary in respect of the period of earned leave at his credit as on the date of retirement subject to a maximum of 240 days with a proviso that the paragraph shall not apply to an officer or a person of the development staff referred to in sub-paragraph (4) of WP(C)No.10980/2010 8 this paragraph or those referred to in paragraph 5. Sub paragraph (5) of paragraph 4 is not applicable for adjudication, only paragraph 5. It is also evident from perusal of the above that no person other than on probation shall leave or discontinue the service without giving notice in writing. 7. The question which arises is whether a person who has resigned without notice would be entitled to the leave encashment or otherwise. The proposition of law that leave encashment is a part of the salary is no longer _res integra_ in view of the finding rendered in paragraph 18 of the aforementioned judgment wherein, referring to the provisions of certain rules it has been held that the leave encashment would be part and parcel of the salary. Paragraph 18 of the judgment reads as under : _“18. As far as leave encashment dues are concerned, the issue is no longer at large. In_ _**Senior Higher Secondary School Lachhmangarh** (supra) this court held that "salary” under the Act includes leave encashment. The relevant observations are extracted below :_ _19. The contention urged is that Section 16 refers to various conditions of service including pay whereas Section 29(1) refers only to 'scales of pay and allowances' and not the 'conditions of service'. Learned counsel submits that by implication, Section 29 excludes the benefit of leave encashment. We are unable to accept the above contention._ _20. Section 16 confers a rule-making power on the State Government to regulate recruitment and conditions of service including conditions relating to qualifications, pay, gratuity, insurance, age of retirement, entitlement of_ WP(C)No.10980/2010 9 _leave, conduct and discipline etc. of employees of aided institutions. Section 16 has to be read and worked harmoniously with Section 29 which directs maintenance of parity in the scales of pay and allowances between employees of aided institutions and Government institutions._ _21. As we have held above the expression pay and allowances in Section 29 read with wider definition of the word 'salary in Section 2(r) of the Act has a very vide connotation. We have come to the conclusion that the expression includes benefit of leave encashment which is nothing but salary for the unavailed leave to the credit of the employee._ _22. Section 16 confers rule-making power on the State Government to regulate Conditions of service of employees of aided institutions. The Section specifically confers power to frame rules regarding entitlement of leave. If leave salary is of kind a salary within the wide definition of 'salary under Section 2(r), the rules to regulate conditions of service of employees of aided institutions, must be so framed as to maintain parity in conditions of service in that regard with employees in Government institutions. That is the mandate of Section 29 of the Act. The contention, therefore, advanced that subject-matter of entitlement of leave encashment is covered by Section 16 of the State but is beyond the purview of Section 29 of the Act, is fallacious and has to be rejected._ _23. While construing the provision under consideration, it is to be borne in mind that interpretation of a welfare legislation should be to promote education. The service conditions of the employees of the aided institutions are sought to be improved and brought at par with those in Government educational institutions to maintain educational standards. It has also to be borne in mind that our Constitution makers have placed the field of education at a higher pedestal and granted it a special status. Various provisions of the Constitution deal with the aspect of advancement of education. The primary education has been held to be a fundamental right in the decision of this Court in_ _**Unni Krishnan, J.P. and Ors. v. State of Andhra Pradesh** [JT 1993 (1) SC 474) and this aspect still holds the field despite the decision having been overruled on some other aspects in_ _**T.M.A.**_ WP(C)No.10980/2010 10 _**Pai Foundation and Ors. v. State of Karnataka and Ors.** [JT 2002 (9) SC 1) To improve education, various State Governments grant aid to educational institutions and, by and large, teachers of aided private schools deserve to be treated at par with teachers of Government institutions to the extent possible. The provisions of these Acts deserve to be liberally interpreted in favour of the teaching class except where statute may compel otherwise. A statute of no other State has been brought to our notice where similar benefit has been denied to the teachers of the aided institutions to improve education. The service conditions of the teachers also deserve to be improved."_ 8. No doubt the parties to the lis are governed by the Rules. The Rules have to be read as it is without any interpretation by taking the aid of the other provisions of law. I would be failing in my duty if not referring to the contents of the letter Ext.P2 dated 04.07.2007 whereby the resignation of the petitioner was accepted. The same reads as under : _“The competent authority has decided to accept your resignation with effect from the close of office hours on 01.06.2007. Your request for waiving period of notice has not been accepted by the competent authority and therefore recovery of salaries will be effected in lieu of shortfall in notice period, which please note.”_ 9. It is evident that the resignation of the petitioner was accepted without any stipulation/demur. There could have been force in the argument of the counsel representing the respondents had there been reference regarding non compliance of certain conditions of the paragraph or the sub-paragraph, while accepting WP(C)No.10980/2010 11 the resignation. In the absence of the same, I am of the considered view that the petitioner who had submitted a resignation by complying with the provisions of paragraph 5 ibid would be entitled to leave encashment as per sub-paragraph (5) of paragraph 4 of the scheme. 10. For the reasons aforementioned, Writ in the nature of mandamus is issued in favour of the petitioner against the respondents to pay the leave encashment calculated strictly as per the provisions of the Scheme referred above, along with a nominal rate of interest @6% per annum, within a period of two months from the date of receipt of a copy of this judgment. **Sd/-** **AMIT RAWAL JUDGE** csl WP(C)No.10980/2010 12 |||**APPENDIX**| |---|---|---| |**PETITIONER'S **||**EXHIBITS**<br> **:**| |EXT.P1|:|COPY OF THE LETTER OF APPOINTMENT DATED| |||12.6.1986 ISSUED BY THE 1ST RESPONDENT| |||TO THE PETITIONER| |EXT.P2|:|COPY OF THE LETTER DATED 4.7.2007 ISSUED BY| |||THE 2ND RESPONDENT ACCEPTING THE| |||PETITIONER'S RESIGNATION| |EXT.P3|:|COPY OF THE STATEMENT OF ACCOUNTS SHOWING| |||THE AMOUNTS DISBURSED TO THE PETITIONER| |EXT.P4|:|COPY OF THE REPRESENTATION DATED 18.8.2007| |||SUBMITTED BY THE PETITIONER| |EXT.P5|:|COPY OF THE REPRESENTATION DATED 30.10.2007| |||SUBMITTED BY THE PETITIONER| |EXT.P6|:|COPY OF THE COMMUNICATION DATED 4.11.2008| |||SENT BY THE PETITIONER TO THE 2ND| |||RESPONDENT| |EXT.P7|:|COPY OF THE JUDGMENT DATED 20.7.2009 IN| |||WP(C)NO.17699/2009| |EXT.P8|:|COPY OF THE REPRESENTATION DATED 25.9.2009| |||SUBMITTED BY THE PETITIONER| |EXT.P9|:|COPY OF THE ORDER DATED 30.11.2009 PASSED| |||BY THE 2ND RESPONDENT| |RESPONDENTS'||EXHIBITS :| |ANNEXURE|R2(A): COPY OF THE GENERAL INSURANCE|| |||(TERMINATION, SUPERANNUATION AND| |||RETIREMENT OF OFFICERS AND DEVELOPMENT| |||STAFF) SCHME, 1976| |ANNEXURE|R2(B): COPY OF THE OPTION FORM DATED 26.10.1995|| |||SUBMITTED BY THE PETITIONER| |ANNEXURE|R2(C): COPY OF THE LETTER OF RESIGNATION DATED|| |||2.4.2007 SUBMITTED BY THE PETITIONER|