Dismissed

The Fertilizers and Chemicals v. Dr.a.J.Augustine

Kerala HC27 Feb 2018WA/491/2017

Case brief

AI extract

What is this about?

This bench dismissed appeals filed by FACT against an order allowing former employees to encash accrued earned leave upon resignation. The court held that the amended Leave Rules permit encashment on cessation of service for any reason except dismissal for misconduct, and a subsequent pay revision order did not duplicate the restrictive freeze.

What did the court decide?

Directing appellants to give effect to the single judge's judgment and disburse monetary benefits within two months.

The Fertilizers and Chemicals Vs… — Pension and Retirement Benefits | Kerala HC (2018)

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IN THE HIGH COURT OF KERALA AT ERNAKULAM

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PRESENT:

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THE HONOURABLE MR.JUSTICE P.N.RAVINDRAN

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THE HONOURABLE MR. JUSTICE R. NARAYANA PISHARADI

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TUESDAY, THE 27TH DAY OF FEBRUARY 2018 / 8TH PHALGUNA, 1939

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WA.No. 491 of 2017 IN WPC. 33684/2015

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AGAINST THE ORDER/JUDGMENT IN WP(C) 33684/2015 of HIGH COURT OF KERALA DATED 11-01-2017

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APPELLANT(S)/RESPONDENTS 1-3

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1 THE FERTILIZERS AND CHEMICALS TRAVANCORE LIMITED REPRESENTED BY ITS CHAIRMAN AND MANAGING DIRECTOR,

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ELOOR, UDYOGAMANDAL, KOCHI-683501

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2 CHAIRMAN AND MANAGING DIRECTOR

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FACT LTD, ELOOR, UDYOGAMANDAL, KOCHI-683501

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3 THE CHIEF MANAGER (HR),

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FACT LTD, ELOOR, UDYOGAMANDAL,

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KOCHI-683501

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BY ADVS.SRI.M.GOPIKRISHNAN NAMBIAR

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SRI.P.GOPINATH SRI.K.JOHN MATHAI SRI.JOSON MANAVALAN

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SRI.KURYAN THOMAS

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RESPONDENT(S)/PETITIONER AND 4TH RESPONDENT:

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DR.A.J.AUGUSTINE S/O A. V JOSEPH, ALANCHERY HOUSE, 262/111, NEAR GOVT. HIGH SCHOOL KALAMASSERY, ERNAKULAM DISTRICT-683104

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UNION OF INDIA REPRESENTED BY ITS SECRETARY MINISTRY OF PERSONNEL, PUBLIC GRIEVANCES AND PENSIONS, DEPARTMENT OF PERSONNEL AND TRAINING NEW DELHI-110001

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R1 BY SRI.M.P.PRAKASH

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R2 BY ADV.SRI.K.THYAGARAJESWARAN, CGC

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THIS WRIT APPEAL HAVING COME UP FOR ADMISSION ON 27-02-2018 ALONG WITH WA 491/2017, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

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“C.R.”

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P.N. Ravindran & R.Narayana Pisharadi, JJ.

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- - - - - - - - - - - - - - - - - - - - - -- - - W.A.Nos.491 and 507 of 2017

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- - - - -- - - - - - - - - - - - - - - - - - - - - Dated this the 27^th February, 2018

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JUDGMENT

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P.N.Ravindran, J.

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These writ appeals arise from the common judgment delivered by a learned single Judge of this court on 11.01.2017 in W.P.(C) Nos.33684 of 2015 and 31700 of 2014 respectively. The appellants are respondents 1 to 3 in the respective writ petitions. The brief facts of the case are as follows:

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The first respondent in W.A.No.491 of 2017 and the sole respondent in W.A.No.507 of 2017 are former employees of Fertilisers and Chemicals Travancore Limited, otherwise known as 'FACT'. The first respondent in W.A.No.491 of 2014 (petitioner in W.P.(C) No.33684 of 2015) entered service in FACT as Process Technician in 01.06.1983. In course of time, he was promoted to the post of Deputy Chief Manager (HR). While he was thus working as Deputy Chief Manager (HR), he submitted an application for appointment as Deputy General Manager (HR, Administration & Training) in Kochi Metro Rail Limited, by submitting Ext.P1 application. The said application was forwarded by his employer namely FACT to Kochi Metro Rail Limited along with Ext.P2 letter dated 09.07.2013 wherein it is inter alia mentioned that

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WA Nos.491 & 507 of 2017

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eventhough the petitioner has applied for appointment on deputation basis, that request cannot be acceded to and in the event of he being selected for the post, his release from FACT will be subject to the rules in that regard. The petitioner in W.P.(C)No. 33684 of 2015 was selected for appointment as Deputy General Manager (HR, Administration & Training) in Kochi Metro Rail Limited. Since deputation was not acceded to, he submitted a letter of resignation which was accepted and he was relieved from FACT on 31.10.2013. Thereafter, he joined the Kochi Metro Rail Limited on 01.11.2013.

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After joining the Kochi Metro Rail Limited (KMRL for short), the petitioner in W.P.(C)No.33684 of 2015 submitted Ext.P10 representation dated 20.10.2014 to the Chairman and Managing Director of FACT requesting him to pass orders transferring 261 days of privileged leave available to his credit at FACT, to KMRL. By Ext.P11 letter dated 6.12.2014, the Chief Manager (HR), FACT, informed him that as his service had not been transferred to KMRL with the consent of FACT and as he had resigned from FACT to join the KMRL on contract basis, his request in Ext.P10 cannot be acceded to. The petitioner in W.P.(C)No.33684 of 2015 thereupon submitted Ext.P12 representation dated 16.12.2014 to the Chairman and Managing Director of FACT reiterating the request in Ext.P10. He thereafter filed

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WA Nos.491 & 507 of 2017

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W.P.(C)No.33684 of 2015 in this court on 4.11.2015 challenging

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Ext.P11 letter and seeking the following reliefs:

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“ (i) To call for records leading to Ext.P11 and quash the same by issuance of a writ of certiorari or any other appropriate writ, direction or order;

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(ii) To declare that the denial of the right to transfer the accrued earned leave while in service of the 1^st respondent to Kochi Metro Rail Ltd. is illegal, arbitrary, unreasonable, unfair and violative of the rights guaranteed under Articles 14, 16, 21 and 300A of the Constitution;

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(iii) To declare that the denial of encashment of earned leave and half pay leave up to 300 days accrued to the credit of the petitioner while in service of the 1^st respondent is illegal, arbitrary, unreasonable, unfair and violative of the rights guaranteed under Articles 14, 16, 21 and 300A of the Constitution;

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(iv) To issue a writ of mandamus or any other writ, direction or order commanding the respondents 1 to 3 to allow the petitioner to get the earned leave to his credit at the time of the cessation of employment with the 1^st respondent, transferred to M/s Kochi Metro Rail Ltd. by directing the 1^st respondent to remit the cash equivalent of the earned leave in lump sum to M/s Kochi Metro Rail Ltd., within a time frame that may be fixed by this Hon'ble Court;

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Alternatively,

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(v) To issue a writ of mandamus or any other writ, direction or order commanding the respondents 1 to 3 to allow the petitioner to encash the earned leave and half pay leave, up to 300 days to his credit at the time of the cessation of employment with the 1^st respondent, with in a time frame that may be fixed by this Hon'ble Court;

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(vi) To issue such other writ, direction or order which this Hon'ble Court may deem just and proper in the facts and circumstances of the case and

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(vii) To award compensatory cost. ”

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The sole respondent in W.A.No.507 of 2017 (the petitioner in

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W.P.(C)No.31700 of 2014) is a former employee of FACT. While he was

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working as Senior Sales Officer at Bangalore, he submitted Ext.P1

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WA Nos.491 & 507 of 2017

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letter of resignation dated 2.1.2014. He had in the said letter stated that he is resigning from the position held by him due to health reasons. He had also stated therein that he will try to continue in his present post during the notice period or until acceptance of the resignation whichever is earlier. The resignation tendered in Ext.P1 was accepted and the decision communicated to him by Ext.P4 letter dated 2.4.2014 on the expiry of the notice period of three months stipulated in the rules. He thereafter submitted a representation dated 19.5.2014 claiming the benefit of privileged leave encashment. The Chief Manager, FACT in turn sent Ext.P5 letter dated 3.6.2014 informing him that leave encashment is not permitted in the case of employees who leave the organisation on account of resignation. He thereupon submitted Ext.P6 representation dated 24.7.2014 to the Chairman and Managing Director of FACT reiterating his request in the representation dated 19.5.2014. The Chief Manager (HR) in turn sent Ext.P7 letter dated 26.9.2014 informing him that as he had resigned from the service of the company, he is not eligible for leave encashment. He thereupon filed W.P.(C)No.31700 of 2014 in this court on 26.11.2014 challenging Exts.P5 and P7 letters as also the stipulation in paragraph 16(i) of Ext.P8 pay revision order dated 28.8.2001 by which leave encashment was frozen with effect from

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WA Nos.491 & 507 of 2017

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12.7.2001 except as a terminal benefit in the case of retiring and

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death cases and seeking the following reliefs:

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“ (i) issue a writ of certiorari or such other appropriate writ, direction or Order quashing Exhibits P5, P7 and Clause 16(i) of Exhibit P8;

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(ii) issue a writ of mandamus or such other appropriate writ, direction or order directing the respondents to pay the Petitioner his eligible balance leave encashment expeditiously, at any rate within a time limit as fixed by this Honourable Court;

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(iii) issue such other appropriate writ, direction or order as deemed fit by this Honourable Court in the interest of justice, considering the facts and circumstances of the case;

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(iv) direct the respondents to pay costs to the Petitioner. ”

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The two writ petitioners had in their respective writ petitions

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contended that the Leave Rules provide for encashment of privileged leave and there is no provision in the rules governing their service conditions to the effect that resignation will entail forfeiture of that benefit. They also contended that Ext.P9 pay revision order dated 14.8.2010 produced and marked in W.P.(C)No.31700 of 2014 (Ext.P4 in W.P.(C)No.33684 of 2015) does not, unlike in the case of Ext.P8 pay revision order dated 28.8.2001, stipulate that leave encashment is frozen and confined to employees who have retired or who died while in service and therefore, the stand taken by FACT in the impugned letters is not tenable. The FACT resisted the writ petitions by filing separate counter affidavits wherein it inter alia contended that on the terms of the pay revision orders (Ext.P8 dated 28.8.2001 and Ext.P9

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WA Nos.491 & 507 of 2017

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dated 14.8.2010 produced and marked in W.P.(C)No.31700 of 2014) the claim made by the writ petitioners for encashment of privileged leave is not tenable.

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The learned single Judge considered the rival contentions and held that the Leave Rules (produced and marked as Ext.P3 in W.P. (C)No.33684 of 2017) provide for encashment of earned leave even in case of resignation. The learned single Judge further held that the stipulation in clause 16(i) of Ext.P8 order dated 28.8.2001 does not survive beyond 31.12.2006 and therefore, it cannot govern the case of the petitioners who resigned from service on 31.10.2013 and 2.4.2014 respectively. The learned single Judge accordingly allowed the writ petitions and directed that the leave encashment benefits be released to the respective writ petitioners within three months from the date of receipt of a copy of the judgment. The FACT and its officers have, aggrieved thereby, filed these writ appeals.

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We heard Sri.P.Gopinath Menon, learned counsel appearing for the appellants, Sri.M.P.Prakash, learned counsel appearing for the first respondent in W.A.No.491 of 2017 and Sri.Bijoy Chandran, learned counsel appearing for the sole respondent in W.A.No.507 of 2017. Inviting our attention to clause 16(i) of Ext.P8 pay revision order dated 28.8.2001, learned counsel for the appellants contended

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WA Nos.491 & 507 of 2017 7

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that by the aforesaid stipulation, leave encashment was frozen with effect from 12.7.2011 and it was stipulated that the benefit of leave encashment will be available only as terminal benefits in the case of employees who attain the age of superannuation and also in the case of employees who die while in service. Learned counsel contended that on the terms of clause 16(i) of Ext.P8, the respective writ petitioners who had resigned from service are not entitled to the benefit of leave encashment. Learned counsel also invited our attention to Ext.R1(e) judgment delivered by a learned single Judge of this court on 6.8.2012 in W.P.(C)No.21148 of 2007 and contended that the writ petitioners who had accepted the terms of Ext.P8 pay revision order and drawn revised salary and emoluments thereunder, cannot thereafter be heard to contend that the stipulation regarding encashment of privileged leave cannot bind them. Learned counsel contended that as the pay revision benefits have been given as a package with a specific condition that the leave encashment benefit will be available only to those who retire from service and those who die while in service, the writ petitioners who had resigned from service cannot claim the benefit of leave encashment. Learned counsel also submitted that though in Ext.P9 pay revision order dated 14.8.2010, there is no stipulation identical to clause 16(i) of Ext.P8, as the

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WA Nos.491 & 507 of 2017 8

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Presidential sanction for giving effect to the pay revision benefits evidenced by Ext.P5 was granted having regard to the request contained in Annexure A2 letter dated 26.10.2009 wherein it was stipulated that leave encashment will be allowed only at the time of superannuation or in the case of death while in service, it has to be presumed that the Presidential sanction was granted for Ext.P9 pay revision order also, subject to the aforesaid stipulation. Learned counsel submitted that in such circumstances, the impugned judgment is liable to be set aside and the writ petitions dismissed.

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Per contra, learned counsel appearing for the writ petitioners submitted that the stipulations in Ext.P8 which governed the rights of employees only during the period from 1.1.1997 to 31.12.2006 cannot govern the rights of the writ petitioners who resigned from service on 31.10.2013 and 2.4.2014 respectively. Learned counsel submitted that unlike in the case of Ext.P8 pay revision order governing the period from 1.1.1997 to 31.12.2006, in Ext.P9 pay revision order, which is dated 14.8.2010 and which governs the period from 1.1.2007 to 31.12.2016, it is not stipulated that the leave encashment is frozen, that on the other hand in clause 11 of Ext.P9 it is stipulated that leave encashment as per applicable rules shall be on the basis of revised wages with effect from 1.8.2008 and therefore, in the absence of a

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WA Nos.491 & 507 of 2017 9

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stipulation identical to clause 16(i) of Ext.P8 in Ext.P9 pay revision order, the appellants cannot rely on Ext.R1(e) judgment of the learned single Judge. Learned counsel also submitted that though in clause 5.1.3 of Annexure A2 letter dated 26.10.2009 sent to the Government of India, the appellants had stipulated that leave encashment will be allowed only at the time of superannuation or in the case of death while in service, that was not accepted when Ext.P5 Presidential sanction was issued on 3.8.2010. Learned counsel further submitted that that is the reason why no such stipulation was made in Ext.P9 pay revision order dated 14.8.2010 and therefore, the appellants cannot contend for the position that Ext.P5 has to be read in the light of Ext.A2 proposal. Learned counsel submitted that no part of Ext.A2 proposal, which has not been accepted and incorporated in Ext.P9 pay revision order, can be relied on to determine the rights of parties. Learned counsel appearing for the writ petitioners also submitted that on the terms of the Leave Rules also, which have not been amended or kept in suspension by virtue of Ext.P9 pay revision order, the petitioners are entitled to encashment of privileged leave.

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We have considered the submissions made at the Bar by learned counsel appearing on either side. We have also gone through the pleadings and the materials on record. A copy of the Leave Rules

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initially framed by the FACT is on record as Annexure A1 in both the writ petitions. The said Leave Rules were framed and issued on 22.1.1977. In clause 3.3 of the said rules the term “leave year” is defined as follows:

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“3.3 “Leave Year” means the year commencing from 1^st January 1977 and each calendar year thereafter.”

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Clause 5.1 of Annexure A1 which deals with encashment of

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leave, reads as follows:

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“ 5.1 Earned leave which accrued due to a manager and standing at his credit may be paid in cash on cessation of his employment in the Company on superannuation, retirement or death. If the cessation is during the course of the leave year the manager shall be entitled to be credited to his leave account with the proportionate earned leave due for the year. ”

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The writ petitioners have a case that the Leave Rules were amended and the stipulation in Clause 5.1 extracted above, regarding the encashment of leave was altered. The petitioner in W.P. (C)No.33684 of 2016 had also produced a copy of the relevant portion of the amended Leave Rules as Ext.P3. Though initially learned counsel appearing for the appellants had disputed the authenticity and genuineness of Ext.P3, later after getting instructions, learned counsel for the appellants fairly conceded that Clause 5.1 of the Leave Rules produced and marked as Annexure A1 was amended with effect from 11.4.1978 as per a notification dated 27.5.1978. Learned counsel for

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WA Nos.491 & 507 of 2017

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the appellants also handed over to us a copy of the said notification

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and for the sake of convenience, we extract the notification in full:

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“ THE FERTILISERS AND CHEMICALS, TRAVANCORE LIMITED, UDYOGAMANDAL

HEAD OFFICE

CPRM/IC/408/78

May 27, 1978

ALL CONCERNED

Re: Managerial Personnel - Leave rules

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Reference is made to All Concerned Bulletin No.FM.L6/21-83 dated 21-1-1977 announcing the revised leave rules applicable to managerial personnel, which came into effect from 1^st January 1977. The undermentioned amendments to the said rules have been approved and are communicated for information of all concerned.

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2. Clause 4.2(f) - It is hereby clarified that (the mention of the dates, 1^st July and 31^st December in this clause is only for administrative purposes.

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3. The existing clauses 4.3(a), 4.3(b), 4.5 and 5.1 be substituted by the following clauses.

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4.3 Medical leave on half pay

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(a) Entitlement - 20 days in a leave year. For those who join the company during the first half of the leave year, 20 days of medical leave on half pay is admissible and for those who join in the second half of the leave year, 10 days of medical leave on half pay is admissible.

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(b) The maximum accumulation of medical leave shall be restricted to 8 months.

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4.5 Special casual leave with full pay

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(a) Entitlement - For participation in local/national/ international sports/athelectic events in a representative capacity or in coaching or administration of the teams participating in such events - subject to a maximum of fifteen days in a

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WA Nos.491 & 507 of 2017

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leave year.

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(b) Management may provide from time to time special leave with full pay for sterilisation and other family planning measures conforming to guidelines given by Government.

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(c) For appearing in the examinations approved by the Management - Actual number of examination days. This leave can be granted only twice for each examination.

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5.1 Encashment of leave

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(a) Earned leave which accrues to an employee in the managerial cadre and stands to his credit would be paid for in cash on cessation of his employment due to any reason whatsoever other than dismissal for misconduct. If the cessation is during the course of the leave year the manager shall be entitled to be credited to his leave account with the proportionate earned leave due for the year.

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(b) In the case of an employee dismissed from service for misconduct, such earned leave shall not normally be paid for in cash. However, the Board of Directors may, at their discretion, permit encashment of leave in exceptional cases.

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The above mentioned amendments shall become effect from 11-4-1978.

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K.S. Menon,

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CHIEF PERSONNEL MANAGER, for CHAIRMAN & MANAGING DIRECTOR. ”

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The said notification discloses that Clause 5.1 occurring in

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Annexure A1 Leave Rules was amended to take in the case of employees who resign from service. Clause 5.1(a) as amended stipulates that earned leave which accrues to an employee in the managerial cadre and stands to his credit would be paid for in cash on cessation of his employment due to any reason whatsoever other than

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dismissal for misconduct. Even in the case of employees who are dismissed from service for misconduct, Clause 5.1(b) gives a discretion to the Board of Directors to permit encashment of leave. It is thus evident from the Leave Rules governing the employees of FACT in the managerial cadre that they are entitled to encashment of leave on cessation of service due to any reason whatsoever other than dismissal for misconduct. On the terms of the Leave Rules, even an employee who has resigned from service is entitled to encashment of leave.

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That takes us to the question whether Ext.P9 pay revision order which governs the period from 1.1.2007 to 31.12.2016 stands in the way of the writ petitioners from claiming the said benefit. It is not in dispute that during the period from 1.1.1997 to 31.12.2006 there was an earlier pay revision evidenced by Ext.P8 order dated 28.8.2001. In Clause 16.1 thereof it was provided that leave encashment will be frozen with effect from 12.7.2001. An exception was however made in the case of those who retire from service and those who die while in service. A learned single Judge of this court has, interpreting the aforesaid provision, held that as the pay revision order comes as a package, those employees who had accepted it cannot claim leave encashment after 12.7.2001 and during the period to which Ext.P8 pay revision order relates. A reading of Annexure

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R1(e) judgment, more particularly paragraph 2 thereof, discloses that the appellants herein who were the respondents in W.P.(C)No.21148 of 2007 had in the counter affidavit filed in that case taken the stand that as a condition for granting pay revision benefits (during the period from 1.1.1997 to 31.12.2006) there was a specific clause in the pay revision order (Ext.P8) for freezing of leave encashment for a period of 05 years and 05 months except as a terminal benefit in the case of retiring employees and employees who die while in service. That contention was accepted by the learned single Judge. It was held that when pay revision is granted with certain conditions, the employee cannot choose to avail the benefits alone ignoring the conditions. It was held that the employees had to take the pay revision as a whole or not to avail the pay revision benefits. The challenge to the stipulation in clause 16(i) of Ext.P8 was accordingly repelled.

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It is relevant in this context to note that a stipulation similar to Clause 16(1) of Ext.P8 is singularly lacking in Ext.P9 pay revision order dated 14.8.2010 which governs the period from 1.1.2007 to 31.12.2016. Though it was contended before us that a similar stipulation should be read into Ext.P9, in view of Annexure A2 proposal which contains an identical clause, we are not persuaded to accept the said submission. It is no doubt true that in Clause 5.1.3 of Annexure

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A2 proposal dated 26.10.2009 it is stated that leave encashment will be available only at the time of superannuation or in the case of death while in service. Presidential sanction was not accorded for that stipulation. Ext.R3(b) dated 11.7.2001 produced along with the counter affidavit filed by the appellants herein in W.P.(C) No.33684 of 2015 is the Presidential sanction granted for implementing the pay revision for the period from 1.1.1997 to 31.12.2006. In paragraph 3.1 of Ext.R3(b) it is stipulated as follows:

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“3. Hence in accordance with the powers conferred by Articles of Association of Fertilisers and Chemicals Travancore Limited (FACT) the President is pleased to direct implementation of pay/wage revision of its executives and workmen subject to compliance of following conditions:

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i) To freeze leave encashment, excepting as a terminal benefit in respect of retiring and death cases, to ensure savings to the tune of Rs.330 lakhs per annnum.”

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It was in view of this stipulation in the Presidential sanction that when Ext.P8 pay revision order dated 28.8.2001 was issued, a similar stipulation was incorporated in Clause 16(i) thereof. In Ext.P5 which is the Presidential sanction relating to the pay revision for the period from 1.1.2007 to 31.12.2016, there is no such stipulation. The only stipulation is that terminal benefits such as gratuity, leave encashment, etc. will be paid in the case of employees who retired from 1.1.2007 to

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31.7.2008. In the case of employees who continue in service thereafter and choose to resign from service thereafter, there is no stipulation identical to the stipulation contained in Ext.R3(b) letter or in Ext.P8 pay revision order. Even in Ext.P9 pay revision order there is no such stipulation identical to the stipulation in Clause 16(1) of Ext.P8. On the other hand, in clause 11 of Ext.P9 pay revision order, all that is stated is that “the facility of leave encashment as per applicable rules shall be on the basis of revised wages with effect from 1.8.2008. In other words, there was no restriction on the right of employees in the managerial cadre to avail leave encashment facility. As leave encashment was not denied in Ext.P9 pay revision order dated 28.8.2009, Ext.R1(e) judgment in W.P.(C) No.21148 of 2007 cannot be pressed into service to deny the writ petitioners the benefit of leave encashment.

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As stated earlier, the leave rules contemplate grant of leave encashment facility even to employees who resign from service. The words “cessation of employment due to any reason whatsoever other than dismissal for misconduct” occurring in Clause 5.1 of the leave rules extracted in paragraph 11 above, would indicate that leave encashment facility is available even to employees who resign from service as also to employees who retire from service on attaining the

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age of superannuation and employees who die while in service. The learned single Judge was therefore in our opinion perfectly justified in holding that the writ petitioners are entitled to avail the facility of leave encashment.

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For the reasons stated above, we hold that there is no merit in the instant appeals. The appeals fail and are accordingly dismissed with a direction to the appellants to give effect to the judgment of the learned single Judge and to disburse the monetary benefits to the respective petitioners within two months from the date on which either of the writ petitioners produce a certified copy of this judgment before the third appellant in these appeals.

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(P.N. Ravindran, Judge)

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(R.Narayana Pisharadi, Judge)

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kav/

The Fertilizers and Chemicals v. Dr.a.J.Augustine

Case brief

What is this about?

What did the court decide?

The Fertilizers and Chemicals v. Dr.a.J.Augustine

Case brief

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What did the court decide?

What the court decided

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