Allowed

Thankammu.C. v. the Head Master, High School, Anthikkad

Kerala HC2 Jun 2020RSA/66/2008

Case brief

AI extract

What is this about?

The High Court allowed an appeal by a retired school teacher seeking compensation for delayed pension. The court distinguished prior Supreme Court rulings, held that the wrongdoer must be impleaded for vicarious tort compensation, and applied the Indian Trust Act to grant interest as constructive trustee.

What did the court decide?

Allowed appeals and decreed interest of Rs. 21,072/- at 6% per annum from the date of suit until realization.

Thankammu.C. Vs the Head Master, High School… — Pension and Retirement Benefits | Kerala HC (2020)

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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.SOMARAJAN

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TUESDAY, THE 02ND DAY OF JUNE 2020 / 12TH JYAISHTA, 1942

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RSA.No.66 OF 2008(G)

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AGAINST THE JUDGMENT AND DECREE DATED 10-09-2004 IN AS 273/2003 OF DISTRICT COURT, THRISSUR

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AGAINST THE JUDGMENT AND DECREE DATED 29-11-2002 IN OS 2859/2000 OF III ADDITIONAL MUNSIFF COURT, THRISSUR

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APPELLANT/1ST RESPONDENT/PLAINTIFF:

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THANKAMMU.C., W/O UNNIKRISHNA MENON, CHAKADATH HOUSE, ERAVU P.O., THRISSUR DISTRICT.

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BY ADV. SRI.O.V.MANIPRASAD

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SRI.P.C.SASIDHARAN

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RESPONDENTS/APPELLANT & RESPONDENTS 2 TO 5/DEFENDANTS 1 AND 3 TO

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1 THE HEAD MASTER, HIGH SCHOOL, ANTHIKKAD THRISSUR DISTRICT.

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2 THE DEPUTY DIRECTOR OF EDUCATION COLLECTORATE BUILDING, THRISSUR.

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3 THE SECRETARY MINISTRY OF EDUCATION SECRETARIAT, TRIVANDRUM.

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4 THE DIRECTOR OF PUBLIC INSTRUCTIONS JAGATHY, TRIVANDRUM.

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5 STATE OF KERALA REPRESENTED BY THE SECRETARY, EDUCATION DEPARTMENT, TRIVANDRUM.

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R1 TO R4 BY GOVERNMENT PLEADER SRI.P.M.SATHEESH

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THIS REGULAR SECOND APPEAL HAVING BEEN FINALLY HEARD ON 02.06.2020, ALONG WITH RSA.146/2008, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

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RSA.66/2008,RSA.146/2008 2

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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.SOMARAJAN

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TUESDAY, THE 02ND DAY OF JUNE 2020 / 12TH JYAISHTA, 1942

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RSA.No.146 OF 2008

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AGAINST THE JUDGMENT AND DECREE DATED 10-09-2004 IN AS 215/2003 OF DISTRICT COURT, THRISSUR

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AGAINST THE JUDGMENT AND DECREE DATED 29-11-2002 IN OS 2859/2000 OF III ADDITIONAL MUNSIFF COURT, THRISSUR

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APPELLANT/1ST RESPONDENT/PLAINTIFF:

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THANKAMMU C., W/O UNNIKRISHNA MENON CHAKADATH HOUSE, ERAVU P.O., THRISSUR DISTRICT.

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BY ADVS.

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SRI.O.V.MANIPRASAD SRI.P.C.SASIDHARAN

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RESPONDENTS/APPELLANTS & 2ND RESPONDENT/DEFENDANTS:

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1 THE DEPUTY DIRECTOR OF EDUCATION, COLLECTORATE BUILDING, THRISSUR.

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2 THE SECRETARY, MINISTER OF EDUCATION, SECRETARIAT, TRIVANDRUM.

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3 THE DIRECTOR OF PUBLIC INSTRUCTIONS, JAGATHY, TRIVANDRUM.

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4 STATE OF KERALA, REPRESENTED BY THE SECRETARY, EDUCATION DEPARTMENT, TRIVANDRUM.

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5 THE HEAD MASTER HIGH SCHOOL, ANTHIKKAD, THRISSUR DISTRICT.

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R1 BY ADV. SRI.DINESH MATHEW J.MURICKEN R1-R5 BY GOVERNMENT PLEADER SRI.P.M.SATHEESH

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THIS REGULAR SECOND APPEAL HAVING BEEN FINALLY HEARD ON 02.06.2020, ALONG WITH RSA.66/2008(G), THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

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RSA.66/2008,RSA.146/2008 3

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JUDGMENT

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These are the two appeals by the plaintiff, a

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retired school teacher of an aided school, against the reversal of the decree of trial court granting compensation on account of the delayed payment of the pensionary benefits. She retired from service on 31/3/1990. Pensionary benefits were disbursed on 20/6/2000 after the lapse of more than one year and two months. The delay occasioned mainly on the default committed by the then Headmaster in sending the pensionary papers to the first defendant-Treasury Officer. The trial court decreed the suit awarding compensation at the tune of Rs.66,899/- being the interest @ 12% per annum for a period of one year to the pensionary amount of Rs.3,51,199/-. But in appeal, it was reversed and

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the suit was dismissed on the ground that no

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negligence can be proved without the person who committed it, the then Headmaster.

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RSA.66/2008,RSA.146/2008 4

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consideration :

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Whether it is permissible to fasten vicarious liability on the Principal without the juncture of wrong doer ?

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What would be the legal position regarding failure to release pensionary benefits within the permissible time ? Whether the retired employee can maintain an action for compensation on account of vicarious liability as against the principal when there is involvement of a wrong doer ?

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The plaintiff relied on the decision

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rendered by the Apex Court in State of Kerala and

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others v. M.Padmanabhan Nair [( 1985) 1 SCC 429] and Dr.Uma Agrawal v. State of U.P. and another ( AIR 1999 SC 1212) in support of her argument that the employer is duty bound to disburse pensionary benefits and as such the employee who committed the wrong need not be in the party array of the proceedings. In order to fasten vicarious liability, which would arise from the wrong committed, the wrong doer should be in the party array of the proceedings since the liability is joint and several. The principle behind it, is that in proper cases, the employer will have the right

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RSA.66/2008,RSA.146/2008 5

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to recover some or all the damages paid under the vicarious liability from the wrong doer servant on

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account of the servant's tort, but being the employer, the initial liability to compensate the victim is on the Principal. That does not mean that the wrong doer need not be in the party array of the proceedings. All tort-feasors should be in the party array of the proceedings so as to maintain an action under the vicarious liability. The legal position would be different when the wrong or delay committed by the concerned department. It is not at all necessary to implead the department as such in the party array of the suit in order to fasten liability against the employer. A department under the State Government has no separate entity apart from the state Government/employer. But it is the specific case of the plaintiff that the delay was occasioned due to the fault committed by the then Headmaster. Then the person who committed the wrong ( the wrong doer) would step into the shoes of a tort-feasor who is primarily responsible for the wrong done and as such he should be in the

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RSA.66/2008,RSA.146/2008 6

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party array of the proceedings so as to extend vicarious liability against the principal. But when the wrong is committed by an employee, he should be in the party array of the action for getting compensation on account of the wrong done.

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In M.Padmanabhan 's case (supra), the question of non-impleadment of tort-feasors or its legal impact

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not came up for consideration and no legal proposition was laid down on the question of nonimpleadment of wrong doer. What is considered by the three Judge Bench of the Apex Court in Dr.Uma Agrawal 's case ( supra) is with respect to the failure on the part of the department in disbursing

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retiral benefits, wherein the question of constructive liability and its requirement not came up for consideration. So the legal position can be summarised that when there is a wrong committed by an employee, the wrong doer should be in the party array of the proceedings in order to maintain an action for compensation based on tortious and vicarious liability against the employer. But when the wrong is committed by the department under the

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RSA.66/2008,RSA.146/2008 7

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employer, it is not at all necessary to implead the department as such in the party array of the proceedings in order to maintain an action, since the department has no separate entity apart from the employer.

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Yet another essential question also came up for consideration as to what would be the legal position regarding a benefit or advantage acquired by the employer by retaining a statutory compulsory

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benefit of an employee and whether it would come under the purview of Section 88 of the Indian Trust Act, 1882. The application of Section 88 of the Indian Trust Act, 1882 was neither raised nor considered either in the trial court or in the

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first appellate court, though the same would

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constitute a substantial question of law. Admittedly, the amount due is a pensionary benefit, a statutory compulsory benefit, to the employee on

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his retirement. Being a statutory compulsory benefit, it would acquire the character of a deemed trust in the hands of employer for the benefit of

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the employee when it was not disbursed within

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RSA.66/2008,RSA.146/2008 8

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time. All the amounts which are statutory or compulsory in nature held by the employer on behalf of the employee would create a constructive trust for the benefit of employee. Any benefit or pecuniary advantage obtained over the said amount by the employer or the person who holds the amount in trust would be liable for its return to the beneficiary, the employee by the operation of

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Section 88 of the Indian Trust Act, 1882.

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Section 88 of the Indian Trust Act, 1882

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is extracted below for reference:

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“88. Advantage gained by fiduciary -

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Where a trustee, executor, partner, agent, director of a company, legal advisor or other person bound in a fiduciary character to protect the interests of another person, by availing himself of his character, gains for himself any pecuniary advantage, or where any person so bound enters into any dealings under circumstances in which his own interests are, or may be, adverse to those of such other person and thereby gains for himself a pecuniary advantage, he must hold for the benefit of such other person the advantage so gained.”

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(emphasis supplied)

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To create constructive trust under the

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first limb of Section 88 of the Indian Trust Act,

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RSA.66/2008,RSA.146/2008 9

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1882, the parties should be in a fiduciary character by which one of them is bound to protect the interests of another. Existence of a fiduciary character by which one of them would bound himself to protect the interests of another is the essential requirement so as to bring up a relationship within the sweep of first limb of Section 88 of the Indian Trust Act, 1882. The meaning of the words 'fiduciary' and 'fiduciary

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capacity' given in Advanced Law Lexicon (4^th Edition) by P.Ramanatha Aiyer is as follows:

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“ Fiduciary. As a noun, a trustee, a person holding the character of a trustee, or a character analogous to that of a trustee. As an adjective, in the nature of a trust; having the characteristic of a trust;analogous to a trust;relating to or founded upon a trust or confidence.

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One who handles the property of others in a position of trust or confidence; for example, a trustee, a banker, a stock broker.

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A person or body acting in trust. Anyone holding, say, an investment in trust for another is said to be acting in a fiduciary capacity.

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One who has the obligation to be faithful to the principal who places trust and confidence in the fiduciary.

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A person who holds something in trust for another.”

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“Fiduciary Capacity . One is said to act in a “fiduciary capacity” or receive money or contract a debt in “fiduciary capacity”, when

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RSA.66/2008,RSA.146/2008 10

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the business which he transacts, or the money or property which he handles, is not his own or for his own benefit, but for the benefit of another person as to whom he stands in a relation implying and necessitating great confidence and trust on the one part and a high degree of faith on the other part. The term is not restricted to technical or express trusts, but includes also such offices or relations as those of all attorney at law, a guardian, executor, or broker, a director or a corporation, and a public officer.

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A person or institution who manages money or property for another and who must exercise a standard of care in such management activity imposed by law or contract; eg. Executor of estate;receiver in bankruptcy; trustee. A trustee, for example, possesses a fiduciary responsibility to the beneficiaries of the trust to follow the terms of the trust and the requirements of applicable state law. A breach of fiduciary responsibility would make the trustee liable to the beneficiaries for any damage caused by such breach.”

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(emphasis supplied)

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Any property or pecuniary benefit, statutorily recognized as a compulsory benefit, would create a fiduciary relationship with the

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person who holds the amount for the beneficiary and existence of an active implied confidence can be presumed since it is a compulsory benefit protected by statute. Any benefit or pecuniary advantage gained by the employer over the said amount would come under the purview of Section 88 of the Indian Trust Act, 1882 and the employer is

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RSA.66/2008,RSA.146/2008 11

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liable to return the said benefit to the employee.

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The persons named in the section viz., executor,

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partner, agent, director of a company, legal advisor are instances of constructive trustees

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besides the persons bound in a fiduciary character to protect the interests of another person. Admittedly, the pensionary benefit was not

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released within two months from the date of

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retirement and there is a delay of more than one year in disbursing the said amount to the employee. The delay occasioned in disbursing the

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said amount would carry interest so long as the

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same remains in the hands of constructive trustee and liable to return the said pecuniary benefit

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obtained by way of interest to the beneficiary,

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irrespective of any tortious liability, entitlement of compensation for any laches or default committed. Liability to return the pecuniary gains acquired by the deemed trustee to the beneficiary should be understood apart from

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the tortious liability and entitlement of compensation. The liability to return the benefit

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RSA.66/2008,RSA.146/2008 12

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acquired by the operation of Section 88 of the Indian Trust Act by the trustee to the beneficiary is independent, standing on a different pedestal apart from the vicarious liability and entitlement of compensation on account of tortious liability and hence a claim under Section 88 of the Indian Trust Act, 1882 can be maintained in addition to an action for compensation/damages based on tortious liability.

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8.The interest @ 6% per annum would come to Rs.21,072/-. Hence the plaintiff is entitled to a decree for the said amount with future interest @ 6% per annum from the date of suit till the date of realization from the defendants.

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Both the appeals are allowed accordingly. No

costs.

Sd/-

P.SOMARAJAN

JUDGE

Thankammu.C. v. the Head Master, High School, Anthikkad

Case brief

What is this about?

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Thankammu.C. v. the Head Master, High School, Anthikkad

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