Writ petitions WP(C) No. 11548 of 2015 (Vijayakumaran Nair) and WP(C) No. 20419 of 2010 (Artisan's Co-operative Traders & Funds Ltd) v. State of Kerala and Handicrafts Development Corporation of Kerala Ltd; and related matters

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** ## **THE HONOURABLE MR. JUSTICE AMIT RAWAL** **FRIDAY, THE 22[ND] DAY OF DECEMBER 2023 / 1ST POUSHA, 1945** ## **WP(C) NO. 11548 OF 2015** ## **PETITIONER:** VIJAYAKAUMARAN NAIR A. T.C.7/1557(3)PRANAVAM ,TKRA -40,THIRUMALA PO,THIRUVANANTHAPURAM BY ADVS. SMT.SREEDEVI KYLASANATH SRI.ACHUTH KYLAS SRI.M.JAYAKRISHNAN ## **RESPONDENTS:** 1 STATE OF KERALA REPRESENTED BY THE SECRETARY,INDUSTRIES DEPARTMENT, GOVERNMENT SECRETARIAT,THIRUVANANTHAPURAM 695001 2 THE MANAGING DIRECTOR HANDICRAFT DEVELOPMENT CORPORATION THIRUVANANTHAPURAM 695001 BY ADVS. GOVERNMENT PLEADER SRI.K.ANAND SR. SMT.LATHA KRISHNAN THIS WRIT PETITION (CIVIL) HAVING COME UP FOR HEARING ON 22.12.2023, ALONG WITH WP(C).20419/2010, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: **WP(C) NO. 11548 OF 2015 and conctd. Case** **2** **IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR. JUSTICE AMIT RAWAL FRIDAY, THE 22[ND] DAY OF DECEMBER 2023 / 1ST POUSHA, 1945 WP(C) NO. 20419 OF 2010** ## **PETITIONER:** THE ARTISAN'S CO-OP. TRADERS & FUNDS LTD LTD. NO.2033, SREEKANTESWARAM,, THIRUVANANTHAPURAM, REP. BY ITS SECRETARY. BY ADVS. SRI.AYYAPPAN SANKAR SRI.G.SURARSHAN ## **RESPONDENTS:** 1 ASSISTANT ACCOUNTS OFFICER HANDICRAFTS DEVELOPMENT CORPORATION OF KERALA LTD., PUTHENCHANTHAI, THIRUVANANTHAPURAM-695586. 2 R.KALAVATHY DO.RAJAMMAL AGED 61 YEARS, RESIDING AT M-10/15, ASWIN,, INDIRA NAGAR, PEROORKADA,, THIRUVANANTHAPURAM-695505, (CONFIDENTIAL ASSISTANT, (RTD.), HANDICRAFTS DEVELOPMENT CORPORATION). 3 K.VENU SO.KRISHNAN AGED 58 YEARS RESIDING AT CHARUVILA PUTHEN VEEDU,, KALLIYOOR P.O., PERINGAMALA,, THIRUVANANTHAPURAM-695042, (HELPER-HIGH GRADE,, HANDICRAFTS DEVELOPMENT CORPORATION). 4 A.VIJAYAKUMARAN NAIR S/O.ACHUTHAN NAIR, AGED 60 YEARS,, RESIDING AT ROHINI, T.C.8/302,, PUTHENKADA JUNCTION, THIRUMALA P.O.,, THIRUVANANTHAPURAM-695001, (DRIVER-GR.I,, HANDICRAFTS DEVELOPMENT CORPORATION). 5 R.VIJAYALAKSHMI WO.VIJAYAKUMARAN NAIR AGED 56 YEARS, RESIDING AT ROHINI,, T.C.8/302, PUTHENKADA JUNCTION,, THIRUMALA P.O., THIRUVANANTHAPURAM-695001. BY ADV SRI.BIJU BALAKRISHNAN THIS WRIT PETITION (CIVIL) HAVING COME UP FOR HEARING ON 22.12.2023, ALONG WITH WP(C).11548/2015, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: **WP(C) NO. 11548 OF 2015 and conctd. Case** **3** ## JUDGMENT 1. This order shall dispose of two writ petitions; WPC No.20419 of 2010 preferred by the Artisan's Co-operative Traders and Funds Ltd., a Co-operative Society which had extended a facility of loan to R.Vijayalakshmi, W/o Vijayakumaran Nair, who is also the petitioner in WP(C) No.11548 of 2015. The question of law and facts involved in both the writ petitions are identical therefore they are being disposed of together. 2. As per the facts culled out in WPC No.20419 of 2010, Artisan's Co-operative Traders and Funds Ltd is a registered Society which had extended the loan facility of Rs.50,000/- to R.Vijayalakshmi, W/o Vijayakumaran Nair on 30.10.2000 and R.Kalavathy, K.Venu and A.Vijayakumaran Nair-husband stood as surety by executing an agreement / undertaking agreeing to pay the arrears or dues by the Principal debtor. Non liability Certificates are Exts.P2 and P3. Principal debtor remained defaulter, requisition letter was issued to the Assistant Accounts Officer, Handicrafts Development Corporation of Kerala Ltd., to recover the salary from all the sureties vide Ext.P4 dated 15.12.2004. Outstanding arrears as per Ext.P4 letter of requisition was Rs.41,542/- including interest thereon from September 2001 and **WP(C) NO. 11548 OF 2015 and conctd. Case** **4** notice charges. When the recovery proceedings started against the respondent No.2 and 3 only, jurisdiction of Assistant Registrar (Artbitration) vide ARC No.891/2005 was invoked by respondent Nos.2 and 3. In the meanwhile recovery proceedings for about 2 years until dismissal of the ARC were under stay. 3. Again, petitioner Co-operative Society issued requisition letter to the employer of the respondents 2 to 4 dated 26.9.2007, Ext.P6 for realization of the outstanding arrears. Respondents 2 and 3 approached the Lok Ayukta vide complaint No.2416 of 2007 alleging arbitrariness and maladministration while conducting proceedings for recovery. Lok Ayukta passed an ex parte interim order dated 3.12.2007 whereby the recovery proceedings against the sureties other than the husband was stayed. After contest, Lok Ayukta passed final order dated 16.10.2009, Ext.P10 whereby direction was issued to the petitioner herein not to effect recovery from the salary and the benefits of sureties 2 and 3 in view of the undertaking given by husband of the Principal debtor, Sri. Vijayakumaran Nair. It is the said order, which is under challenge in the present writ petition on the ground that the employer vide communication Ext.P12 dated 24.6.2010 ie., departmental proceedings are going on against the husband of the Principal debtor and therefore they are not in a position to recover the **WP(C) NO. 11548 OF 2015 and conctd. Case** **5** amount. 4. In the other writ petition, WP(C)No.11548 of 2015, third surety Vijayakumaran Nair, ie., the husband of the Principal debtor has approached this court with the following prayers: I. To issue writ of certiorari calling for the records relating to Ext.P11 and quash the same. II. To issue a Writ of Mandamus or any other Writ or order directing 2[nd] respondents to disburse the gratuity amount of Rs.1,16,308 with interest. III. To declare that the petitioner is entitled for getting payment of gratuity amount due to him along with interest, without any deduction or recovery in view of the decision of this Hon'ble court in Kunjumohammed v. A.V KSFE and Others. 5. Ext.P11 is the order of the Managing Director, Handicrafts Development Corporation of Kerala Ltd. dated 11.9.2014 stating that the liability of husband towards the different financial institutions including Allahabad Bank and another Society was much more but as far as the liability qua petitioner Cooperative Society was only at Rs.83,084/-. In view of the undertaking, it was mentioned that no outstanding balance amount as payable to him for, the litigation is pending before the Court in WP(C)No.20419 of 2010 at the instance of the Financial institution on various grounds. The gratuity as per communication Ext.P11 was Rs.1,16,308/-. Terminal surrender was Rs.8,917/-. Salary due for 3/02 was Rs.4,155/-. Performance allowance was Rs.4500/-. Festival allowance was Rs.1000/- ie., Total: Rs.1,34,880/-. Section ## **WP(C) NO. 11548 OF 2015 and conctd. Case** ## **6** 13 of the Gratuity Act provides that the gratuity payable under the Act cannot be attached in execution of any decree or order of any civil, revenue or criminal court. Therefore, it is the violation in provisions of Section 5, 13, 14 of the payment of Gratuity Act except on any conditions provided under sub Section 6 of Section 4 of the Act. 6. On the other hand learned counsel representing the employer of husband as well as other sureties relied upon the ratio decidendi culled out in the judgment of this Court in V.S Devarajan and Ors. V. State of Kerala nad Ors. (WP(C) No.8282 of 2018) to contend that once there is an undertaking by one of the sureties to recover an amount towards the outstanding loan liability of Principal borrower who is none but his wife, provisions of sub Section 6 of Section 4 of Payment of Gratuity Act can always be pressed into service. 7. I have heard the learned counsel for the parties and appraised the paper book. The copy of undertaking given by the husband of the principal debtor, petitioner in WP(C) No.11548 of 2015 is dated 11.1.2005. The same reads thus: Consent Letter given before the Managing Director, Kerala Handicrafts Development Corporation, on 11th January 2005, by its driver A.Vijayakumaran Nair. While I was working as driver in the above institution, I have taken an amount of Rs.50,000/- as loan vide HPM 47/2000-01 to meet my personal needs, from the Artisans Co-operative **WP(C) NO. 11548 OF 2015 and conctd. Case** **7** Trades and Funds Ltd., No.233 upon the salary guarantee of my colleagues Smt. R.Kalavathy and Sri. K.Venu. But, because of my financial constraints, I could not repay the loan amount on time and therefore a principle amount of Rs.41,542/- and interest amount of Rs.25,617/-, totalling an amount of Rs.67,159/-, became due and therefore the society has directed to recover Rs.1,000/- each from the salary of those persons till it is discharged. But, considering the fact that, I could not repay the loan amount immediately because of my financial difficulties and since the recovery from my above mentioned colleagues is not appropriate, I hereby consent that the said loan amount along with interest can be deducted from the gratuity amount and salary amount due to me from the said institution. Further, I request before the respectful Managing Director to stop recovery of any amount from those employees till I discharge the entire liabilities. I, driver A. Vijayakumaran Nair, hereby agree to that. 8. In my considered view, the financial institution ie., the petitioner in WP(C) No.20419 of 2010 when submitted a request to the employer, the employer had, as per the communication dated 11.9.2014, Ext.P11 in W.P.(C) No.11548 of 2015, withheld the amount keeping in view of the fact that the husband-surety to the Principal debtor did not owe money to Artisan's Co-operative Society but to other two financial institutions ie., Allahabad Bank, Trivandrum and Ananthapuram Co-operative Society, Trivandrum. Relevant portion of the judgment V.S Devarajan (supra) reads thus: 38. To my mind, this case squarely accords with Jagdev Singh both on facts and on legal principles, too. The petitioners received, on more than one occasion, a benefit not due to them: special advance. The employees' entitlement was subject to the Government’s sanction. So the Corporation provided for the contingency: an undertaking from the employees to refund if the Government did not sanction the advance. Then, the Corporation did all it could to get the sanction, but failed in its effort. **WP(C) NO. 11548 OF 2015 and conctd. Case** **8** 39. So the Corporation enforced the employee’s undertaking. I reckon it does not offend Section 4 (6) of the Act, which relates to forfeiture. And enforcing a contract—not found to be void—cannot be termed a forfeiture. Nor have the petitioners waived a right having an element of public interest. That said, I must observe that gratuity has an element of public interest, as it provides for financial protection in the autumn of a retired employee’s life. Then, I must also observe that every deduction from gratuity does not offend the publicinterest principle. In other words, the amount sought to be deducted and the circumstances under which it is sought to be deducted must also be considered before we determine the element of public interest. It is not a stand-alone principle; rather it is a protean principle. 40. Here, the benefit does not belong to the employees, yet they received it. They received it with an awareness that they may have to pay it back, and they have consciously consented to it. Those amounts deducted, many employees accepted the deduction; but a few protested. That protest is through this writ petition. And most of these employees retired many years ago—beyond five years. True, others accepting the deduction and only a few questioning it hardly matter, for mass acceptance does not defeat one man’s insistence—insistence on his right, at that. 41. In Ext.P18 judgment, a few retired employees filed three writ petitions complaining that the Corporation had so far not paid their retirement benefits. The Corporation, in defence, maintained that as the issue about special advance pay those employees received had still been pending with the Government, they could not conclude the issue. In that context, this Court has held that their terminal benefits should be paid within a time frame with 9% interest. The Court has conspicuously not spelt out on the special pay allowance. Thus, that issue has gone sub silentio. Therefore, Ext.P18, I am afraid, cannot be recorded as a precedent. 42. Keeping aside the legal logomachy, we may as well examine what was the amount the petitioners received. It was “advance”. They called it special advance; the Corporation called it “recoverable advance”. Either way it was an advance. Perhaps, earlier the Government that held the purse-strings converted that advance into a benefit a la an incentive or an allowance. Later, it did not. So the Corporation wanted to recover the amounts. And that recovery was based on the petitioners’ undertaking. 43. To sum up, Section 4 (6) of the Payment of Gratuity Act, 1972, does not defeat the Corporation’s right to enforce the petitioners' undertaking, as it did. Nor could the petitioners establish that the **WP(C) NO. 11548 OF 2015 and conctd. Case** **9** Corporation’s action suffers from any legal infirmity. So the writ petition deserves to be dismissed and it is. No order on costs. 9. The argument that the gratuity cannot be withheld for recovery of the amount, though is correct position of law but in view of the agreement/undertaking as noticed above and the ratio decidendi extracted above, there cannot be any impediment for the employer of the financial institution to recover the amount from the outstanding dues of the surety namely Sri.Vijayakumaran Nair, who is none other than the husband of the Principal debtor. Since the amount is not that high in my considered view, the financial institution ought not to have resorted for recovery proceedings against the other two sureties. The employer of the husband of the Principal debtor is already having a sufficient amount which has been withheld and in case any request is made by the petitioner in WP(C) No.20419 of 2010, Artisan's Co-operative Trades and Fund Ltd., they can always remit the outstanding amount of Rs.83,084/to ward off the liability of at least one of the creditor. Lok Ayukta in my considered view ought not to have interfered in the action of financial institutions taking effective steps for recovery of amount due in the manner and mode. It is purely a lis between the financial institution and the creditor. In view of the aforementioned observation, writ petitions are disposed of by giving liberty to the **10** ## **WP(C) NO. 11548 OF 2015 and conctd. Case** petitioner ie., Financial Institution, Artisan's Co-operative Trades and Funds Ltd to request the employer Handicrafts Development Corporation of Kerala Ltd to remit an amount of Rs.83,084/- due to them out of the available funds them on account of withholding of dues as noticed from the letter Ext.P11. Interim order granted in favour of the petitioner in WP(C) No.11548 of 2015 stands vacated. Sd/- ## AMIT RAWAL sab JUDGE **WP(C) NO. 11548 OF 2015 and conctd. Case** **11** ## **APPENDIX OF WP(C) 11548/2015** PETITIONER EXHIBITS EXHIBIT P1: TRUE COPY OF THE REQUEST FOR VOLUNTARY RETIREMENT DATED 4.7.2002 EXHIBIT P2:TRUE COPY OF THE LETTER 18.4.2002 OF 2ND RESPONDENT EXHIBIT P3: TRUE COPY OF THE LETTER DATED 19.4.2002 EXHIBIT P4: TREU COPY OF COMMUNICATION DATED 23.4.2002 OF 2ND RESPONDENT EXHIBIT P4(A):TRUE COPY OF THE LEETER DATED 10.5.2002 OF 2ND RESPONDENT EXHIBIT P5: TRUE COPY OF THE REPRESENTATION DATED 2.9.2002 EXHIBIT P6: TREU COPY OF THE LETTER NO.HDCK/P&A/2002-03/2459 DATED 16.10.2002 OF 2ND RESPONDENT EXHIBIT P7: TRUE COPY OF COMMUNICATION NO HDCK/P&A/2003-04/913 DATED 1.7.2003 EXHIBIT P8: TRUE COPY OF LETTER NO.HDCK/P&A/2003-04/1453 DATED 27.8.2003 EXHIBIT P9: TRUE COPY PETITIONERS REPLY DATED 3.9.2003 EXHIBIT P10:TRUE COPY OF THE JUDGMENT DATED 5.2.2014 IN WP(C) 11942/2004 EXHIBIT P11: TRUE COPY OF THE PROCEEDINGS DATED 11.9.2014 ISSUED BY 2ND RESPONDENT REJECTING PETITIONERS CLAIM EXHIBIT P12: TRUE COPYOF THE DECISION INKUNJUMOHAMMED'S CASE