Thomas Mathew v. Federal Bank Limited

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT: THE HONOURABLE MR. JUSTICE B.KEMAL PASHA FRIDAY, THE 24TH DAY OF MARCH 2017/3RD CHAITHRA, 1939 RSA.No. 735 of 2015 () ----------------------AGAINST THE JUDGMENT IN AS 44/2014 of PRINCIPAL SUB COURT,NORTH PARAVUR AGAINST THE JUDGMENT IN OS 434/2010 of MUNSIFF COURT,ALUVA APPELLANT(S)/APPELLANT/PLAINTIFF: ---------------------------------- THOMAS MATHEW, AGED 54 YEARS, S/O MATHEW, MAVARAYIL HOUSE, AIKARA COLONY M.A., COLLEGE P.O., MATHIRAPPILLY KARA, KOTHAMANGALAM VILLAGE, KOTHAMANGALAM TALUK, ERNAKULAM DISTRICT, PIN:686691. BY ADVS.SRI.THOMAS M.JACOB SRI.AKHIL K.MADHAV SRI.T.R.JERRY SEBASTIAN RESPONDENT(S)/RESPONDENT/DEFENDANT: ------------------------------------ THE FEDERAL BANK LIMITED REGISTERED OFFICE, POST BAG NO.103, FEDERAL TOWERS, ALUVA VILLAGE, ALUVA TALUK, ERNAKULAM DISTRICT, PIN:683101. R1 BY ADV. SRI.JACOB P.ALEX R1 BY ADV. SRI.JOSEPH P.ALEX THIS REGULAR SECOND APPEAL HAVING BEEN FINALLY HEARD ON 24-03-2017, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: ## [CR] ## B. KEMAL PASHA, J ============== R.S.A.No.735 of 2015 =============== Dated this the 24[th] day of March, 2017 ## J U D G M E N T 1. Can Exhibit-A3 be treated as an order passed by a higher authority as mentioned in the Proviso to Rule 31 of the Federal Bank (Employees’) Pension Rules, 1995, by exercising the discretion conferred on him? 2. Has the Civil Court jurisdiction to entertain a suit of this nature? 3. What should be the guidelines to exercise the discretion under Rule 31 of the Federal Bank (Employees’) Pension Rules, 1995? 2. The plaintiff was appointed as a Clerk in the Federal Bank Limited in the year 1978. He continued R.S.A.732 of 2015 -: 2 :- as such till 2003, when he was promoted as an officer. Thereafter, he was working as the Assistant Manager of the Bank. While so, he had allegedly committed criminal breach of trust by unlawfully and illegally crediting an amount of `49,100/- in his mother-in-law’s account at the Bank. Over and above it, he had procured a furniture loan from the Bank to the tune of `40,000/-, and instead of making that payment directly to the person from whom the furniture were procured, he credited the amount to his mother-in-law’s account. The said amounts were later withdrawn by the mother-in-law. He was served with memo of charges detailing the aforesaid two charges. He admitted the said transactions and consequently, he was found guilty in the enquiry and he was dismissed from the service of the Bank. 3. As per the Federal Bank Limited (Officers’) Service Rules, 2002 (hereinafter referred to as ‘2002 Rules’), he had opted for Pension Scheme instead of R.S.A.732 of 2015 -: 3 :- Provident Fund Scheme. Therefore, the employer’s contribution to the Provident Fund Scheme would automatically go to the Pension Scheme. If an officer, who opts to continue in the Provident Fund Scheme, even if dismissed for misconduct, fraud or any such similar cause, he is entitled to the employer’s contribution after deducting the actual loss, if any, suffered by the Bank at the instance of such an officer. 4. As per the rules of the Federal Bank (Employees’) Pension Rules, 1995 (hereinafter referred to as ‘1995 Rules’), if an employee, who has opted to be governed by 1995 Rules, his dismissal, removal or termination from service, shall forfeit his pension. At the same time, as per the proviso to Rule 31(1) of 1995 Rules, “the authority higher than the authority competent to dismiss or remove or terminate him from service may, if - (i) such dismissal, removal or termination R.S.A.732 of 2015 -: 4 :- is on or after the 1[st] day of November, 1993; and - (ii) the case is deserving of special consideration, sanction a compassionate allowance not exceeding two-thirds of the pension, which would have been admissible to him on the basis of the quantifying service rendered up to the date of his dismissal, removal or termination.” Rule 31(2) says: “The compassionate allowance sanctioned under the Proviso to Sub-rule (1) shall not be less than the amount of minimum pension payable under Rule 36 of the Rules 1995.” 5. Based on the proviso to Section 31(1) of the Rules 1995, the plaintiff preferred Exhibit-A2 representation dated 22.12.2008 before the Managing Director and CEO, Federal Bank Limited, seeking a humanitarian approach by highlighting his sad predicaments, thereby seeking compassionate R.S.A.732 of 2015 -: 5 :- allowance as provided under Rule 31 of 1995 Rules. Thereupon, the Additional General Manager (P & HRD) of the Federal Bank Limited issued Exhibit-A3 dated 03.03.2009 to the plaintiff, which reads as follows: “This is to inform you that after a careful scrutiny of the request submitted by you, competent authority has declined your request for granting compassionate allowance.” 6. Dissatisfied with the way in which the matter was dealt with by the employer through Exhibit-A3, the plaintiff has approached the Munsiff’s Court, Aluva, through O.S.No.434 of 2010, by way of a suit for mandatory injunction directing the defendant Bank to grant compassionate allowance to the plaintiff as provided under Rule 31 of 1995 Rules. The trial court, by holding that a judicial review is not possible in the matter and further that as per Rule 31 of 1995 Rules, it is the exclusive privilege or R.S.A.732 of 2015 -: 6 :- prerogative of the authority concerned to decide the question of compassionate allowance, dismissed the suit. Aggrieved by the judgment and decree, the plaintiff approached the Subordinate Judge’s Court, North Paravur, through A.S.No.44 of 2014. The lower appellate court has also concurred with the findings entered by the trial court, and dismissed the appeal. 7. This Court has admitted this second appeal on the following substantial questions of law raised in the appeal memorandum: “1. Has not the competent Civil Court, exercise the power of Judicial Review as well as Judicial Scrutiny in a case like this? 2. Has not the Civil Court jurisdiction to consider whether the competent authority is justified in denying the claim of the plaintiff? 3. Has not the Civil Court jurisdiction to consider whether the decision of the competent R.S.A.732 of 2015 -: 7 :- authority is correct? 4. Has not the Civil Court the power to grant relief to the plaintiff as prayed for? 5. Can there be discrimination in respect of benefits to employees terminated from service, between those who had chosen to continue under the Provident Fund Scheme and employees who had opted for Pension Fund Scheme? 6. Is not the Competent Authority bound to follow settled principles of law while disposing of the claim for compassionate Allowance of the employees? 7. Is not the Competent Authority bound to follow Wednesbury’s Principle? 8. Can the discretion of the Competent Authority allowed to be exercised in an arbitrary manner? 9. Will not denial of claim of the plaintiff amount to imposing further punishment upon him? 10. Upon whom is the burden to R.S.A.732 of 2015 -: 8 :- show that the Competent Authority had exercised the discretion in a judicious manner?” 8. Heard the learned counsel for the appellant and the learned counsel for the respondent in extenso. 9. The learned counsel for the appellant has argued that Rule 31 of the Rules 1995 clearly reflects a contractual obligation, which gives rise to a right to the employee concerned to have a compassion from an authority higher than the authority competent to dismiss, remove or terminate the employee, in order to have a compassionate allowance for his continued sustenance, when his right to pension has been forfeited. It is argued that the authority competent to exercise such a discretion has not exercised any such discretion in the matter and therefore, the civil right of the appellant has been violated. It has also been argued that the civil court has jurisdiction in the matter when the plaintiff R.S.A.732 of 2015 -: 9 :- does not fall within the category of a workman as defined under the Industrial Disputes Act. Further, the Federal Bank Limited, who is the defendant in the suit, is not Government and therefore, the plaintiff cannot have recourse to a judicial review through Article 226 of the Constitution of India. 10. Per contra, the learned counsel for the respondent has argued that the respondent can only be considered as a person in the status of a contractor, who has employed some persons at his choice and therefore, in such case, a judicial review is not possible. It has also been argued that the civil court has no jurisdiction to decide such a matter. Further, an attempt has been made to argue that Exhibit-A3 is not an order passed by the authority competent to exercise the discretion; whereas it is only an intimation showing the result of an order passed by the authority competent to exercise that power. R.S.A.732 of 2015 -: 10 :- 11. The learned counsel for the appellant has invited the attention of this Court to the decision in Thankappan Nair v. State of Kerala [2001 (3) KLT 855] rendered by a Division Bench of this Court. It was a case relating to a Police Constable, who was dismissed from service, under Rule 5 of Part II of Kerala Service Rules, on a charge of acceptance of illegal gratification of `43/-. He submitted a representation seeking the grant of compassionate allowance. On the ground that he was removed from service for the acceptance of illegal gratification, the Government rejected his representation. In that context, it was held in paragraph 6 that: “A reading of the rule will show that persons dismissed or removed from service on the ground of misconduct are also eligible for compassionate allowance. Acceptance of illegal gratification is a misconduct and basing on the said misconduct, the appellant has been removed from R.S.A.732 of 2015 -: 11 :- service also. It is evident from the rule that persons like the appellant who are removed from service for misconduct are also eligible to receive compassionate allowance, provided other conditions are satisfied. The mere fact that he is removed from service for a misconduct will not result in his application being rejected at the threshold. R.5(a) is not meant for virtuous persons, but on the contrary, it is meant to ameliorate the conditions of sinners dismissed from service. The mere fact that his removal was due to a serious misconduct, appears to us not to conclude the issue. Many other circumstances may be relevant in deciding the claim for compassionate allowance. If an employee has amassed wealth by receiving bribe, his claim for compassionate allowance can be justifiably rejected on that ground alone. There may be cases where dismissal was for a solitary fall from virtue. In our social conditions a punishment to an employee is in fact a R.S.A.732 of 2015 -: 12 :- punishment for his wife and children also. The circumstances pleaded by the appellant about the health of his wife and the state of unemployment of his children may not be out of context in deciding the payment of compassionate allowances. The financial position can be got verified through the revenue officials. He is one who has served the Government about eighteen years. The Government while passing Ext.P2 order has not taken into account various relevant factors. The Government failed to bear in mind that rule is also meant for the benefit of unworthy fellows who are dismissed from service for serious misconduct. But, even in their case, there may be extenuating circumstances to pay compassionate allowance, albeit they are unfit to be retained in service. Going by “Wednesbury principle”, the omission to take into account relevant factors and taking into account irrelevant factors render a decision ultra vires. In the instant case, for the R.S.A.732 of 2015 -: 13 :- failure to take into account various relevant factors, the impugned order is liable to be quashed.” 12. It was further held in Thankappan Nair (Supra) that the grant of compassionate allowance is a matter within the discretion of the Government; but the said discretion has to be exercised fairly taking into account the relevant facts and by omitting to take into account irrelevant facts within the meaning of 'Wednesbury Principle'. It was held that such a decision should be in accordance with rules of reason and justice, and not according to the whims and fancies of the decision maker. 13. Based on the decision in Commissioner of Police v. Gordhandas Bhanji [AIR (39) 1952 SC 16], it was further held that: “The power under Rule 5 is a power coupled with a duty to act when the circumstances warranting the exercise of that powers are shown to exist. Power R.S.A.732 of 2015 -: 14 :- is the capacity vested in an authority to affect the rights of others whereas the duty is an obligation to act in a particular manner which creates a corresponding right in somebody else.” 14. According to the learned counsel for the appellant, the fact that the plaintiff was dismissed from service on account of misappropriation or criminal breach of trust alone should not be the criteria to decide whether the plaintiff is entitled to compassionate allowance within the meaning of the proviso to Rule 31(1) as well as under Rule 31(2) of 1995 Rules. It has been pointed out that even in case of such dismissals, such delinquents are also entitled to compassionate allowance, in case, they are entitled to have such compassion. It has been pointed out that, had the plaintiff opted to continue in the Provident Fund Scheme, definitely, he would have been entitled to the employer's contribution R.S.A.732 of 2015 -: 15 :- also with interest after deducting loss, if any, suffered by the Bank. 15. It is true that unfortunately, the plaintiff had opted to have the benefit of the Pension Scheme through 1995 Rules. In such case, a dismissal, removal or termination from service shall result in the forfeiture of his pension. At the same time, such a provision is not there in the Provident Fund Scheme. It is in such a context, the discretion to be exercised by an authority higher to the authority competent to dismiss that employee, has to be considered. That power has been given specifically to an authority, which is higher to the authority, who is competent to dismiss the employee. Therefore, it clearly points out that an impartial exercise of such a discretion has to be exercised in the matter relating to compassionate allowance. Had that power been given to the disciplinary authority, who dismisses the employee from service, definitely such an authority R.S.A.732 of 2015 -: 16 :- would have the natural tendency to deny such a claim, by stating that the employee is not entitled to have any compassion by considering the act done by him, which eventually led to his dismissal. 16. The learned counsel for the respondent has argued that Ext.A2 representation was considered by the authority competent to take a decision on such representation and what was informed through Ext.A3 was only the result of such an exercise made by the authority competent to decide the matter. The said argument can only be swallowed with a pinch of salt. Had there been any such decision on Ext.A2 and a speaking order was passed, definitely such order would have been communicated and conveyed to the plaintiff. In the absence of such an order communicated and conveyed to the plaintiff, it is evident that there is no such exercise made by the authority competent to take a decision in the matter. 17. On a close reading of the provisions R.S.A.732 of 2015 -: 17 :- contained under the proviso to Section 31(1) as well as under Rule 31(2) of 1995 Rules, it is evident that the discretion created through the said provision is not wide enough to exclude all the employees removed from service on account of the misconduct, from availing the benefit of such compassionate allowance. Had there been no dismissal, removal or termination, and any such misconduct comes to light after the retirement of such an employee, definitely, he would have been entitled to pension. It was only because of such dismissal, removal or termination from service, such person has to forfeit his pension. It is by considering such a circumstance, the provisions regarding compassionate allowance have to be construed. Had the plaintiff not opted the Pension Scheme and continued with the Provident Fund scheme, definitely he could have received the employer’s contribution with interest, after deducting the loss, if any, sustained to the employer. Merely R.S.A.732 of 2015 -: 18 :- because he has opted the Pension Scheme, it will be too harsh to say that he will have to forfeit everything in the case of a dismissal. That is the reason why the provision regarding the compassionate allowance has been incorporated in Rule 31. It should be understood in that sense. 18. Therefore, in normal circumstances, even if an employee is dismissed from service on account of misconduct, such compassionate allowance should not be disallowed to such an employee merely on account of the misconduct for which he was dismissed. Of course, there may be circumstances wherein the authority competent to exercise such a discretion can deny compassionate allowance to such a person or an employee who was dismissed from service on account of misconduct. Say for example, in a case wherein the employee is a multimillionaire who does not want any compassion, or in the case of an employee whose acts has resulted in R.S.A.732 of 2015 -: 19 :- severe pecuniary loss to the Bank which will outweigh even the amount of compassionate allowance in total, or persons or employees who had similar antecedents of serious nature. 19. Now the contents of Ext.A2 has to be considered to note down whether the plaintiff has invited the authority to exercise compassion towards him. It has come out that even during the disciplinary proceedings, the entire amounts involved were repaid and the Bank has not suffered any loss in the matter. It is true that he has committed misconduct. At the same time, adequate punishment in the form of dismissal was imposed on him. He has explained the purpose for which he had to commit the said misconduct. Such an amount was immediately required for the purpose of a serious surgery to be performed on the child of his brother-in-law, who was crippled in an accident. Of course, even such an explanation will not justify his R.S.A.732 of 2015 -: 20 :- act. At the same time, it has to be considered that the said explanation is not one for seeking his reinstatement into the service of the Bank. The said explanation is one for inviting compassion towards him by way of compassionate allowance. 20. He has clearly averred that the Bank has not suffered any loss in the matter and he had repaid the entire money in full with interest thereon. He has averred that his family, consisting of his aged and ailing mother, wife and two children have been passing through a very difficult phase, ever since his dismissal. The punishment imposed on him has resulted in a stigma on his family, which has caused social isolation as well as severe mental agony. His search for livelihood was not successful due to the disgraceful dismissal imposed on him. Further, he had explained that his financial position is bad and is unable to make both ends meet. Are these not circumstances enabling the exercise of compassion R.S.A.732 of 2015 -: 21 :- by a higher authority of the Bank wherein he had served for almost 28 years? 21. No doubt, the aforesaid circumstances narrated by him are circumstances to invite a compassionate approach towards the plaintiff, and the Bank need not think once again whether he is entitled to have such a compassion or not. Ext.A2 is self speaking, which should necessarily invite compassion from the authority concerned. In such circumstances, the Bank cannot deny his claim and cry for a compassionate allowance within the meaning of the proviso to Section 31(1) of 1995 Rules. 22. It is evident that the cries of the plaintiff fell in deaf and cruel ears. The same were not attended to. Ext.A2 was thrown to dustbin, even without adhering to the solemn principles of natural justice. Therefore, it is evident from Ext.A3 that the competent authority has not applied its mind in the R.S.A.732 of 2015 -: 22 :- matter and has most mechanically declined his request for compassionate allowance. That is not the way in which Ext.A2 had to be considered by the authority competent to go into it. The authority has not even adhered to the principles of natural justice and no opportunity of being heard was extended to the plaintiff. In these circumstances, it has to be held that the plaintiff is entitled to compassionate allowance. Of course, the quantum of such compassionate allowance shall be decided by the authority competent to do it, as per the proviso to Section 31(1) of 1995 Rules. 23. Regarding the jurisdiction of the civil court, the matter involved has arisen from a contractual obligation. In such case, one cannot say that the violation of any such contractual obligation or denial of the discharge of such obligation will not give rise to a civil right. It seems that through the aforesaid provision in 1995 Rules, a right has been created. ## R.S.A.732 of 2015 -: 23 :- The right is to get a discretion exercised by the authority competent to exercise such discretion for granting compassionate allowance. A remedy is also there, by way of compassionate allowance. Though a right has been created and a remedy has also been prescribed, and at the same time no forum for enforcement of such a remedy has been prescribed, no doubt, the civil court assumes jurisdiction, and it should be treated as a matter which gives right to a suit of a civil nature. Both the courts below have lost sight of the said aspect and have concurrently found that the matter was not within their reach. 24. Matters being so, this Court is satisfied that the plaintiff is entitled to compassionate allowance. At the same time, it is for the authority competent to exercise its discretion within the meaning of the proviso to Rule 31(1) of 1995 Rules to decide the claim based on the said proviso as well as Rule 31(2) of Rules 1995. The said matter is left to the R.S.A.732 of 2015 -: 24 :- discretion of the authority competent to decide. In the result, the judgments and decrees passed by the courts below are set aside. It is declared that the plaintiff is entitled to compassionate allowance within the meaning of proviso to Section 31(1) of 1995 Rules. The defendant is directed through a mandatory injunction to decide the quantum of compassionate allowance to be paid to the plaintiff as per the proviso to Rule 31(1) and Rule 31(2) of 1995 Rules, as expeditiously as possible, at any rate, within a period of two months from the date of receipt of a copy of this judgment. All interlocutory applications in this appeal are closed. Sd/- B. KEMAL PASHA JUDGE DSV/UV/27/3/17 [True copy] P.S. to Judge.