SANJAY KAURA vs AIR INDIA LIMITED
* IN THE HIGH COURT OF DELHI AT NEW DELHI
% Reserved on: 29th November, 2023
Pronounced on: 15th December, 2023
+ W.P.(C) 768/2019
SANJAY KAURA ….. Petitioner
Through: Mr. Om Prakash with
Mr. Anshul, Advocates.
versus
AIR INDIA LIMITED ….. Respondent
Through: Mr. Lalit Bhasin, Ms. Nina Gupta,
Ms. Ananya Marwah and Mr. Ajay Pratap Singh, Advocates.
+ W.P.(C) 770/2019
F.G. RUNDA ….. Petitioner
Through: Mr. Om Prakash with
Mr. Anshul, Advocates
versus
AIR INDIA LTD. ….. Respondent
Through: Mr. Lalit Bhasin, Ms. Nina Gupta,
Ms. Ananya Marwah and Mr. Ajay Pratap Singh, Advocates.
CORAM:
HON’BLE MR. JUSTICE ANISH DAYAL
JUDGMENT
ANISH DAYAL, J.
1. These petitions have been filed by Mr. Sanjay Kaura (Petitioner No. 1) and Mr. F.G. Runda (Petitioner No. 2) (collectively referred to as petitioners) assailing two separate decisions dated 11th October, 2018 (impugned decisions) passed by the Deputy Chief Labour Commissioner (Central) and the Appellate Authority under the Payment of Gratuity Act, 1972 (Appellate Authority). The appeals were filed by the respondent-management under section 7(7) of the Payment of Gratuity Act, 1972 (the Act) impugning orders dated 21st May, 2018 and 25th May, 2018 (orders of the Controlling Authority) passed by the Controlling Authority under the Act and Assistant Labour Commissioner (Controlling Authority). In the claim applications filed by the petitioners, orders of the Controlling Authority had directed the management to pay the gratuity amount of Rs.3,43,073/- along with simple interest at the rate of 10% per annum with effect from 13th July, 2012 till the date of actual payment in favour of Petitioner No.1 and Rs.3,96,761/- along with simple interest at the rate of 10% per annum with effect from 22nd January, 2013 in favour Petitioner No. 2 for delayed payment.
Factual Background
2. Petitioner No. 1 was appointed as Accounts Assistant in the Finance Department, Northern Region NACIL [formerly known as Indian Airlines Limited (IAL)] in April, 1990 whereas Petitioner No. 2 was appointed as Traffic Superintendent in the Northern Region NACIL in December, 1990 respectively. Vide letters dated 7th December, 2000 and 22nd December, 2000 the petitioners were suspended from their services with respondent-management on account of serious allegations of misconduct. A First Information Report (FIR) dated 24th May, 2000 was registered by the Central Bureau of Investigation (CBI) being RC 4(S)/2000-SIU.I under sections 120-B read with sections 380, 408, 419, 420, 467, 468, 471, and 511 of the Indian Penal Code, 1860 in which charge sheet had also been filed. Vide order dated 12th December, 2000, bail had been granted to the Petitioner No. 2 (only one bail order was produced). On 11th February, 2003, the management issued a charge sheet to the petitioners alleging that they along with other persons had hatched a plan in the year 1999 to take out the stock of Cash Value Documents (CVDs) unauthorisedly from IAL and thereafter illegally enriched themselves by getting tickets cancelled and refunded from various IAL stations.
3. On the basis of an enquiry report pertaining to the said allegations, show cause notices were issued to the petitioners proposing penalty of dismissal from service without terminal benefits. After considering the replies filed by the petitioners and finding no extenuating reasons to dilute the alleged charges, petitioners services were dismissed on 13th July, 2012 and 22nd January, 2013 respectively. The petitioners filed preferred an appeal before the Appellate Authority, i.e. Executive Director, Northern Region of the Management which came to be rejected vide letters dated 21st June, 2013 and 31st July, 2013. In August, 2014, the petitioners raised an industrial dispute challenging their wrongful dismissal which is still pending adjudication before the Central Government Industrial Tribunal, Delhi. In the meantime, in May, 2017 they filed an application before the Controlling Authority under the Act for payment of their gratuity. Vide orders dated 21st May, 2018 and 25th May, 2018, the petitioners applications for payment of gratuity were allowed by the Controlling Authority. The respondent-management filed an appeal against the same before the Appellate Authority which set aside the orders of the Controlling Authority by way of the impugned decisions.
Submissions on behalf of the Petitioners
4. Learned counsel for the petitioner has assailed the impugned decisions on the following grounds:
4.1 The respondent-management had not issued any show cause notice to the petitioners under the Act for forfeiture of gratuity.
4.2 Learned counsel for the petitioner relied upon the observation of the Controlling Authority where it was noted that it was an admitted case that no show cause notice for forfeiture of gratuity was ever issued. Reliance was also placed on the decision of the Honble Calcutta High Court in Indian Iron and Steel Company v. Himangshu Bikash Sarkar &Ors. (2006) 2 CALLT89 (HC) which held that the principles of natural justice are required to be complied with.
4.3 The avowed reason for forfeiture of gratuity under section 4(6)(b)(i) and (ii) of the Act was on account of the managements assertion that the services of the employees had been terminated for an act which constituted an offence involving moral turpitude and committed by them during the course of their employment. Learned counsel for the petitioner submitted that even assuming that the alleged offence involved moral turpitude, it had not led to any conviction and had not been proved in accordance with law yet. In this regard, he drew the Courts attention to the FIR lodged by CBI in 2000 and the charge sheet filed subsequently, however, no charges have been framed against the petitioners till date, even after the passage of over 20 years.
4.4 Forfeiture of gratuity under section 4(6)(a) of the Act involves an assessment of damage for loss which had been caused to the employer due to the offending act of the employee and if so established, his gratuity could be forfeited only to the extent of damage or loss so caused. It was submitted that the losses alleged by the respondent/management were approximately Rs.6.67 lakh (which form part of the management charge sheet) whereas the Court granting bail to the petitioners directed deposit of Rs.1,50,000/- for each of the petitioners, in cash, with Reservation Office of Indian Airline at Safdarjung Airport. It was submitted that the management already had a security which was more than the purported loss. Pertaining to this, he relied upon the decision of the Honble Supreme Court in Jaswant Singh Gill v. Bharat Coking Coal Limited (2007) 1 SCC 663 where it was held that forfeiture may only be done in cases where the employee has been convicted for an offence involving moral turpitude. He further relied upon the decision of this Court in Surendra v. Syndicate Bank, 2019 (161) FLR 292 and the decision of Honble Supreme Court in Union Bank of India and Others v. C. G. Ajay Babu and Another, 2018 (158) FLR 948 which also decided the issue on similar lines.
4.5 It was also stated that the management had paid gratuity and all other terminal dues to legal representatives of Sh. Sukhbir Singh Sangwan (now deceased), who was also charge-sheeted along with the petitioners. Thus, forfeiture of gratuity of the petitioners, it was contended, was tantamount to unequal treatment and, violative of Article 14 of the Constitution of India, 1950, particularly, since he was an alleged co-delinquent.
Submissions on behalf of the Respondent
5. In response, learned counsel for the respondent submitted as under:
5.1 The question raised by the petitioners in the present writ petitions were academic in nature, especially at this stage, considering that the criminal court of competent jurisdiction was still seized of proceedings in the said FIR registered by the CBI. Only upon culmination of trial and the criminal process, could the petitioners lay a claim for payment of gratuity, if so exonerated therein. At this stage, the plea of the petitioners counsel that forfeiture can only happen on conviction, would involve awaiting the criminal trial to achieve a logical conclusion.
5.2 Reliance by the petitioners counsel on Union Bank of India (supra) was misplaced as the facts therein are distinguishable inasmuch as, in the said case, there was a bipartite settlement which provided for forfeiture only if the misconduct, leading to dismissal, caused financial loss to the management/Bank. In light of such settlement, the Court held that section 4(6)(a) and (b) of the Act are to be read together, and forfeiture of gratuity is permissible only to the extent of the loss caused by the delinquent employee. As no loss was caused, granting protection of the bipartite settlement, it was held that gratuity cannot be forfeited. The said decision also cemented that forfeiture was permissible only if termination of the employee is due to misconduct involving an offence of moral turpitude and subsequent conviction by a court of competent jurisdiction. Respondents counsel had no quarrel with the submission of the petitioners counsel inasmuch as conviction is necessary for any forfeiture of gratuity. However, it was contended that as the petitioners have not been convicted by the criminal court yet, the present petitions are premature and academic at this stage. The said decision was also distinguished on facts since in Union Bank of India (supra) the employer had not set the criminal law in motion by registering an FIR or filing a criminal complaint, which was not the case as regards the petitioners herein as an FIR had been registered by the CBI with a subsequent filing of the charge sheet.
5.3 The decision in Surendra (supra) was distinguished on the basis that the disciplinary authority in that case had not quantified the loss / damage and therefore, forfeiture was disallowed. In the instant cases, the management had quantified the financial loss at Rs.6,67,390/- each which was evident from the charge sheet dated 11th February, 2003 filed during the disciplinary enquiry conducted by the respondent/management and the subsequent enquiry reports dated 14th September, 2010 and 12th October, 2010 respectively.
5.4 Respondents counsel drew attention to the seriousness of the charges against the petitioners as narrated in the enquiry report. It was essentially alleged that in 1999, the petitioners, in connivance with other persons of the company and outsiders, planned to take out stock of CVDs unauthorisedly from stores at Palam and illegally make money by getting the tickets cancelled and refunded from various ticket stations. The petitioners received a bundle of 100 blank manual Indian Airlines double sector tickets which were taken out unauthorisedly from the store by dodging the staff on duty. They got those validated using the office at night and proceeded to get the tickets cancelled and refunded by an unauthorised process.
5.5 As regards the show cause notice, attention was drawn to the memoranda dated 15th April, 2011 and 30th August, 2011 against petitioner No. 1 and petitioner No. 2 respectively which referred to the charge sheets dated 11th February, 2003 and report of the Enquiry Officer dated 14th September, 2010 and 12th October, 2010 respectively. The said memoranda noted the petitioners comments had been received and considered by the disciplinary authority who had perused the entire case, examined the report and documents and concurred with the findings of the Enquiry Officer. He further stated that due to the gravity of acts of omission and commission, a major punishment was proposed to be imposed and accordingly, dismissal from services of the company with immediate effect without any terminal benefits, was notified as proposed punishment. In these memoranda, it is specifically stated that, you are advised to show cause within seven days of receipt thereof as to why the proposed punishment should not be imposed on you.. Respondents counsel, therefore, stated that since there was no set format under the Act for issuance of show cause for forfeiture of gratuity, principles of natural justice were already complied with as the petitioners were provided an opportunity to object to the punishment proposed.
5.6 Respondents counsel further pointed out that the petitioners dismissal was challenged before the Ld. Labour Court and order dated 10th August, 2018 was passed stating that the enquiry conducted by the Enquiry Officer was in violation of principles of natural justice since the management had not examined the witnesses and adduced evidence. It was held that the management had reserved its rights to adduce evidence on merits and therefore, an opportunity ought to be granted to the management in that regard.
5.7 The management challenged the said decision of the Ld. Industrial Tribunal before this Court in W.P.(C) Nos. 426/2019 and 475/2019 where an order dated 3rd July, 2019 was passed. It was noted by this Court that the management had stated that these were cases of loss of confidence by the management and actually no enquiry was required to be conducted in consonance with the principles laid down by this Court in State Bank of Travancore v. Prem Singh 2019 SCC OnLine Del 8258. This Court had held that the employee could be terminated without enquiry in case of loss of confidence, and even if enquiry was held to be had, the employee was not entitled to reinstatement but only compensation. In response thereto, the counsel for the workers had submitted that they would restrict their claim for compensation only before the Industrial Tribunal in view of this principle. Accordingly, the matter was remanded back to the Industrial Tribunal for hearing the matter afresh in terms of the principles laid down by this court in State Bank of Travancore (supra). The matter was heard and an order dated 16th February, 2022 was passed by the Ld. Presiding Officer rejecting the arguments advanced by the management to accept the order of termination for loss of confidence without any further evidence and directed the management to adduce evidence to prove the charges against the petitioners. The management challenged this before this Court in Writ Petition (Civil) 8931/2022 where this Court noted that the Ld. Presiding Officer had ignored the direction of this Court on 3rd July, 2019 (as noted above). This Court then vide order dated 24th August, 2022, directed that the Tribunal should examine the matter afresh in terms of the principles laid down by Court in State Bank of Travancore (supra) and if the determination is found to be on the basis of loss of confidence, the claim of workers should be confined only to compensation. If found that the removal was not on the basis of loss of confidence, only then would the Tribunal proceed with recording of the evidence.
5.8 Pursuant to this direction, the Ld. Presiding Officer of the CGIT rendered an award on 31st May, 2023 holding that the dismissal of services of the petitioners was legal and valid on the basis of loss of confidence and that they were not entitled to any relief either of reinstatement, back wages or any compensation. The said award confirms, as per the respondents counsel, the decision of the management to terminate the services of the petitioners on the basis of loss of confidence. This award has now been challenged by the petitioners before this Court in the W.P.(C) Nos. 13285/2023 and 13290/2023 and are still pending adjudication before this Court.
5.9 As regards the plea taken by the petitioners with respect to parity with Sh. Sukhbir Singh Sangwan on account of payment of gratuity and all other terminal dues to his legal representatives, the respondents counsel pointed out that the same was done only because Sh. Sukhbir Singh Sangwan had expired even before the disciplinary authority could take any action, and therefore, the question of parity does not arise in the case of the petitioners.
6. In rejoinder, learned counsel for the petitioners submitted that the management had shifted its stand from termination due to misconduct of the petitioners to loss of confidence, however, forfeiture of gratuity cannot be premised on termination based on loss of confidence. By having improvised their stand in order to avoid the challenge to enquiry proceedings, the management had therefore, in effect, given up the issue of misconduct. Accordingly, they were no longer empowered to forfeit the gratuity. The award dated 31st May, 2023 was therefore only on the issue of loss of confidence and did not render a conviction or touch upon the issue of misconduct.
Analysis
7. Heard the learned counsel for the parties and examined the documents placed on record. The central issue relates to forfeiture of gratuity in circumstances where employees have been terminated for an act which constitutes an offence involving moral turpitude, having committed the same during the course of their employment. Reference for this purpose is made to section 4(6)(b) of the Act, extracted as under:
(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.
8. It is evident that the charges were framed against the petitioners by the respondent/management involving unauthorised appropriation of stock of CVDs from the company stores and using them in conspiracy and in connivance with other persons for illegal and unjust enrichment. A full process of enquiry was carried out by the management, the petitioners were given full opportunity to represent their case and the charges were held to be proven. Subsequently, the disciplinary authority again examined the report and the documents, concurred with the findings of the Enquiry Officer and proposed a major punishment involving dismissal from the services of the company with immediate effect and without any terminal benefits. There cannot be any dispute with the fact that the petitioners services were indeed terminated by the respondent/management for the reasons cited above.
9. Issue then arises of show cause notice to the petitioners for forfeiture of gratuity. The respondent/management contended that there is no specific format of notice which is prescribed under the Act for the purpose of forfeiture of gratuity. However, what would be relevant is whether the principles of natural justice were adhered to. It is not denied that letters dated on 15th April, 2011 and 30th August, 2011 were sent to the petitioners respectively which notified them that the disciplinary authority had proposed the punishment of dismissal from services of the company with immediate effect without terminal benefits and time of 7 days was given to them to show cause as to why the punishment proposed not be imposed on them.
10. This Court is not deliberating further on the necessity of a specific and separate notice to be issued under the Act for forfeiture, in view of the notice of dismissal of services without any terminal benefits being given above; as also in light of opinion of this Court on the legality of the forfeiture itself (as elaborated hereunder).
11. It is not denied that an FIR was lodged by the CBI in the year 2000 and a charge sheet was also filed subsequently. It is another matter that charges have not been framed for the last two decades in the proceedings arising out of the said FIR and charge sheet. This, however, cannot be a reason to contend, at this stage, that petitioners will possibly be convicted for the offence charged. It would be up to the petitioners / State to seek whatever remedies are at their disposal to complain of and assail this long delay in consideration of the charge sheet and completion of the criminal procedure in accordance with law and before the court of competent jurisdiction.
12. It will be then upto the criminal court to apply its mind on the charge sheet, decide whether or not to frame charges and as to whether the petitioners have to be sent for trial, and finally whether they will be convicted or not.
13. The issue which arises before this Court, therefore, is whether the petitioners not being convicted at this stage, permit the management to invoke section 4(6)(b)(ii) of the Act for forfeiture of gratuity. In essence, it involves determination by the management that the act for which the services of the employees have been terminated, constitutes an offence involving moral turpitude. For this, the petitioners have rightly relied upon Union Bank of India (supra) where it has been held as under:
15. Under sub-Section (6)(a), also the gratuity can be forfeited only to the extent of damage or loss caused to the Bank. In case, the termination of the employee is for any act or wilful omission or negligence causing any damage or loss to the employer or destruction of property belonging to the employer, the loss can be recovered from the gratuity by way of forfeiture. Whereas under sub-Clause (b) of sub-Section (6), the forfeiture of gratuity, either wholly or partially, is permissible under two situations (i) in case the termination of an employee is on account of riotous or disorderly conduct or any other act of violence on his part, (ii) if the termination is for any act which constitutes an offence involving moral turpitude and the offence is committed by the employee in the course of his employment. Thus, sub-Clause (a) and sub-Clause (b) of sub-Section (6) of Section 4 of the Act operate in different fields and in different circumstances. Under sub-Clause (a), the forfeiture is to the extent of damage or loss caused on account of the misconduct of the employee whereas under sub-Clause (b), forfeiture is permissible either wholly or partially in totally different circumstances. Sub-Clause (b) operates either when the termination is on account of- (i) riotous or (ii) disorderly or (iii) any other act of violence on the part of the employee, and under Sub-Clause (ii) of sub-Section (6)(b) when the termination is on account any act which constitutes an offence involving moral turpitude committed during the course of employment.
16. Offence is defined, under The General Clause Act, 1897, to mean any act or omission made punishable by any law for the time being in force.
17. Though the learned Counsel for the appellant-Bank has contended that the conduct of the respondent-employee, which leads to the framing of charges in the departmental proceedings involves moral turpitude, we are afraid the contention cannot be appreciated. It is not the conduct of a person involving moral turpitude that is required for forfeiture of gratuity but the conduct or the act should constitute an offence involving moral turpitude. To be an offence, the act should be made punishable under law. That is absolutely in the realm of criminal law. It is not for the Bank to decide whether an offence has been committed. It is for the court. 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 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.
(emphasis supplied)
14. It has been categorically held by the Honble Supreme Court that it is not the conduct of a person involving moral turpitude that is required for forfeiture of gratuity but the conduct or the act should constitute the offence involving moral turpitude. and that To be an offence, the act should be made punishable under law… That is absolutely in the realm of criminal law. What has been highlighted in the above decision after explaining the scope and purview of the phrase offence and its meaning within the context of section 4(6)(b)(ii) of the Act, is that it is not for the Bank to decide whether an offence has been committed. It is for the court. This emphatic statement on point of law and interpretation by the Honble Supreme Court is binding and fully applicable to the facts of this case. Even though in Union Bank of India (supra), the management had not registered an FIR, the principle laid down therein is on the very interpretation of said provision of section 4(6)(b)(ii) of the Act and would hold ground.
15. The Honble Supreme Court in Union Bank of India (supra) relied upon a prior decision in Jaswant Singh Gill (supra) and observed that:
19.
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.
16. This aspect has been reiterated in and applied by a Division Bench of this Court in Rajiv Saxena v. The Chief General Manager & Ors. 2018 SCC OnLine Del 12390, where gratuity was forfeited by the management pursuant to punishment of compulsory retirement by the disciplinary authority and a registration of a criminal case by the CBI. In fact, in that case a show cause notice specific on the issue of forfeiture of gratuity was issued as well. In the said petition preferred by the worker challenging forfeiture of gratuity, this Court held that the case therein had progressed merely till the stage of filing of charge sheet. Subsequently, it observed that, The criminal court concerned will hereafter apply its mind to the contents of said charge sheet and pass an order on charge. The progress of the criminal case will depend on whether charges are framed against the Appellant; whether he is sent up for trial on those charges; whether he is convicted for the offences with which he is charged and whether such conviction attains finality. A further question would then arise as to whether the offences for which the Appellant is ultimately convicted would involve moral turpitude, as is mentioned in sub-clause (ii) of Section 4(6)(b) PG Act as discussed hereinbefore. The Court relied upon the decision in Union Bank of India (supra) and held that the decision of the management in forfeiting the gratuity of the worker was premature and could not have been taken at that stage. This Court accordingly set aside the order forfeiting the gratuity of the worker.
17. Other courts have also followed Union Bank of India (supra) and held that forfeiture of the gratuity would require initiation of criminal proceedings that would have culminated in conviction for an offence. The High Court of Judicature at Bombay in Western Coal Fields Ltd. v. The Presiding Officer Appellate Authority under the Payment of Gratuity Act, 1972 & Anr. 2020 SCC OnLine Bom 168 held as under:
16. Therefore, for an employer to deprive an employee of gratuity under Section 4(6)(b)(ii) of the said Act, would necessarily require initiation of criminal proceedings that would culminate in conviction for an “offence”. The employer could then come to a conclusion that such an offence does involve moral turpitude and then forfeit the gratuity of an employee. This is because the said provision has to be interpreted strictly as it has the consequence of depriving an employee of gratuity for which he would otherwise be eligible, based on long years of continuous service.
(emphasis supplied)
18. High Court of Chhattisgarh, Bilaspur in Siyaram Basanti v. Chhattisgarh Rajya Gramin Bank WPS No.503/2020 relying upon Union Bank of India (supra), directed release of gratuity and leave encashment of the workers.
19. Considering the principles laid down by the Honble Supreme Court, as well as the consistent view taken by various courts including this Court, the submission of the petitioners has to be accepted.
20. No purpose would be served in assessing the other submission relating to the change of the stand of the management from termination due to misconduct to termination due to loss of confidence. In fact, the said alteration from misconduct to loss of confidence as the final reason for termination further dilutes the stand taken by the respondent-management.
21. The stress laid by the respondent-management that the seriousness of the offence entails a stricter view and ought to lead to forfeiture of gratuity, cannot be countenanced, simply since whatever the situation, due process of law cannot be circumvented.
22. In this regard, reference may also be made to observation of the Honble Supreme Court in State of Jharkhand and Ors. v. Jitendra Kumar Srivastava and Anr. (2013) 12 SCC 210 wherein it was observed that gratuity and pension are not bounties; they are hard earned benefits which accrue to an employee and are in the nature of property.
23. Underscoring the importance of gratuity in the context of service of an employee, it is worthwhile to note the observation of the Honble High Court of Bombay, Nagpur Bench in Western Coal Fields Ltd. (supra)
14. Since section 4(6)(b)(ii) of the Act is an exception to the whole object and purposes the Act to pay gratuity to an employee for the continuous service put in, it has to be interpreted strictly.
24. Needless to state, the issue relating to their dismissal and termination forms a separate litigation stream. For the reasons stated above, impugned decisions dated 11th October, 2018 passed by the Deputy Chief Labour Commissioner (Central) and the Appellate Authority under the Payment of Gratuity Act, 1972 are set aside.
25. Present writ petitions are accordingly allowed and disposed of.
(ANISH DAYAL)
JUDGE
DECEMBER 15, 2023/sm.
W.P.C 768/2019 & W.P.C 770/2019 19/19