Posted On by &filed under High Court, Karnataka High Court.

Karnataka High Court
P.D. Chiyanna vs Karnataka Agro Industries … on 10 November, 2000
Equivalent citations: 2001 (88) FLR 814, ILR 2001 KAR 483, 2001 (4) KarLJ 632, (2001) ILLJ 967 Kant
Bench: R Gururajan


1. This petition is filed challenging an order dated 21-3-2000, Annexure-H to the writ petition bearing No. SCP.II.VRS-1999/2000 issued by the respondent herein and for a mandamus directing respondent to pay to the petitioner Rs. 1,18,627/- together with interest at 18% per annum from 23-1-2000 until date of payment. Petitioner was working as Foreman Supervisor in the Karnataka Agro Industries Corporation Limited (for short ‘Corporation’). He was subjected to certain disciplinary proceedings by the Corporation resulting in an order of dismissal dated 30-3-1996. Prior to the dismissal the petitioner was kept under suspension by the Corporation. Petitioner challenged the order of dismissal imposed on him by the Corporation by way of a Writ Petition No. 15215 of 1997. During the pendency of the petition in terms of the discussion between the parties the Board of Directors of the said Corporation decided to reinstate the petitioner subject to certain conditions. According to the petitioner the conditions are that of recovery of Rs. 40,440/- and not to claim any back wages. Petitioner was to give an undertaking accepting these conditions. Annexure-A is an undertaking given by the petitioner to the Corporation.

2. Petitioner thereafter was reinstated by an order dated 12-11-1998 as per Annexure-B. In the said order according to the petitioner an error has crept in with regard to recovery of subsistence allowance already paid to the petitioner. The said condition was not acceptable to the petitioner. Hence, a representation was sent as per Annexure-C questioning the recovery of the subsistence allowance already paid to him by the Corporation. No order is passed on the said representation.

3. The respondent-Corporation had introduced a voluntary retirement scheme by way of a circular dated 27-5-1999 as per Annexure-D. Petitioner opted for the same on 2-6-1999 and same came to be accepted from 20-1-2000. Petitioner was also relieved by the Corporation on 22-1-2000,

4. After acceptance of the option of the petitioner respondent issued Annexure-H, dated 21-3-2000. In the said order the Corporation has deducted a sum of Rs. 1,18,627/- out of gratuity amount payable to the petitioner. It is this deduction that is questioned by the petitioner in this petition by raising several grounds.

5. Respondent pursuant to the notice has filed a counter-statement. They admitted of their decision to reinstate the petitioner subject to certain conditions. They accept the undertaking as per Annexure-A and also the order at Annexure-B. They say that the petitioner had agreed not to claim any benefits and the Board was justified in deducting the subsistence allowance already paid to the petitioner. They further rely on Annexure-R1 by which the petitioner has withdrawn his representation dated 5-12-1998 Annexure-C which refer to an objection of the deduction of subsistence allowance from the terminal benefits. According to them that in view of withdrawal of objection petitioner cannot be permitted to question the same before this Court. They further argue that the goodness of the Corporation is being taken advantage of by the petitioner in raising these unsustainable pleas.

6. The petitioner in reply to the counter has stated that he has submitted two representations on the very same day viz., 5-12-1998, one pertaining to the objection with regard to deduction of subsistence allowance from the terminal benefits and another representation with regard to time scale promotion. According to the petitioner he had only withdrawn the time bound scale complied in terms of representation dated 5-12-1998. In the light of this controversy between parties, I had directed the petitioner’s Counsel to file an affidavit with regard to withdrawal of time bound representation dated 5-12-1998. An affidavit is also filed in that regard.

7. I have heard the Counsel at great length. I have gone through the pleadings filed before this Court.

8. The petitioner admittedly was dismissed on an earlier occasion by an order dated 30-3-1996. The said dismissal was a subject-matter in Writ Petition No. 15215, of 1997. Parties have come to mutual understanding in the matter of settlement between them. In terms of the understanding the petitioner has given an undertaking dated 4-8-1998 (Annexure-A) in which the petitioner has agreed for recovery of Rs. 40,440/-. He has stated that the period of suspension and dismissal be treated as break in service and that he would not be eligible for any back wages and other benefits. Subsequently an order was passed at Annexure-B, dated 12-11-1998. As per this order the Corporation had ordered recovery of Rs. 40,440/- in 40 instalments from the salary of the petitioner. The Corporation has further stated that the period of suspension and dismissal be treated as break in service, subsistence allowance already paid is to be recovered out of salary. Thereafter when this order came to be issued Annexure-C has been submitted by the petitioner, objecting to the deduction of subsistence allowance from the salary of the petitioner. In the meanwhile the Board has issued a circular providing for option for voluntary retirement from the service of the Corporation. The petitioner has opted for the voluntary retirement as per Annexure-E which came to be accepted as per Annexure-F. After acceptance the Board has issued an office order ordering deduction of a sum of Rs. 1,18,627/- being subsistence allowance paid to the petitioner by the Corporation.

9. Mr. Rajagopal, learned Counsel raised two-fold contentions. First being that the said deduction is contrary to the understanding between the parties. In fact according to him it is specifically objected for recovery of the sum in his objection dated 5-12-1998. No order has been passed on the said appeal. The second contention is that no recovery can be made from the gratuity payable to the petitioner as sought to be done by Annexure-H.

10. Per contra Mr. Patil, learned Counsel vehemently contends that there were two representations submitted by the petitioner of the same date. He has withdrawn the objection for recovery of subsistence allowance and that being the position it is not open to him to now contest the same after withdrawing this objection as is evidenced from document dated 20-1-2000 and Annexure-R1 letter dated 1-1-2000. He further contends that the recovery is effected in view of the mutual understanding between the parties.

11. After giving my careful consideration to rival views I am of the view that the controversial issue as to which of the representation dated 5-12-1998 was withdrawn by the petitioner in terms of Annexure-RA1 need not be decided in this petition in view of a sound legal defense available to the petitioner. I leave that question open since this objection can be disposed of without going into that controversy in view of the legal issue involved in the case on hand.

12. Admittedly the petitioner has opted for VRS in terms of Annexure-D, circular dated 27-5-1999. Payment schedule in the circular referred to gratuity being paid as per Gratuity Act. Therefore there is no difficulty in holding that the gratuity, is paid in terms of the Gratuity Act, 1972. Parties also agree to this proposition. Payment of Gratuity Act is a Central Act. It is a self-contained Code. The said Act provides for a gratuity for meritorious service rendered by an employee. It is not a gratis, bakshi or inam made over to a employee by an employer. It is a statutory payment for meritorious service. Payment of gratuity Act provides for payment of gratuity under Section 4 of the Act. Sub-section (6) of Section 4 provide for forfeiture to the extent of damage or loss of an employer. Section 4(6)(b) provide for forfeiture wholly or partially in the event of a termination of service of an employee for his riotous or disorderly conduct or any other act of violence on his part and it further provides that if his services are 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. Admittedly in the case on hand the petitioner’s services have not been terminated as per subsection (6) of Section 4. It is a case of acceptance of option in terms of VRS. There is no provision available under the Act for deducting the subsistence allowance made over to an employee. Even the scheme does not provide for a deduction from the terminal benefits of this nature. It is only shortage or assessed misappropriation that could be deductible from the terminal benefits. In the light of non-availability of a clause either under the Act or under the scheme, I am of the view that the said deduction is unsustainable in law and it virtually amounts to forfeiture which is permissible only under certain circumstances. This circumstance do not exist in the case on hand. Hence, I have no hesitation in holding that the said deduction of Rs. 1,18,627/- from the terminal benefits in terms of Annexure-H requires my interference and I do so in this case.

13. In the circumstances Annexure-H is set aside insofar as deduction of Rs. 1,18,627/- is concerned. A direction is issued to the Corporation to make over this payment along with interest at 18% from 21-3-2000 till the date of the settlement. Time for compliance is three months from the date of a receipt of copy of this order. I make it clear that I have not expressed any opinion with regard to right of recovery of this amount of subsistence allowance by way of mutual understanding. Parties are at liberty to proceed in accordance with law if they so desire in this matter on that issue.

14. Writ petition is allowed in the above terms but without any order as to costs.

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