Allowed

The Managing Director, v. Ch.Laxmaiah

Telangana HC18 Feb 2011WA/928/2010

Case brief

AI extract

What is this about?

The Division Bench allowed the writ appeal filed by the A.P. State Agro Industries Corporation Limited. The court held that an employee who opted for voluntary retirement and received ex gratia benefits calculated on the basis of retirement leave was not entitled to additional notice period salary or post-cutoff stagnation increments.

What did the court decide?

Writ appeal allowed; lower court order passed in W.P.No.919 of 2004 set aside; no costs to either party.

The Managing Director, Vs Ch.Laxmaiah — Pension and Retirement Benefits | Telangana HC (2011)

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THE HON’BLE SRI JUSTICE B.PRAKASH RAO AND THE HON’BLE SRI JUSTICE V.SURI APPA RAO

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Writ Appeal No.928 of 2010

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Date: 18-02-2011

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Between

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A.P. State Agro Industries Corporation Limited, H.No.6-2-45/7, Bank Colony, A.C. Guards, Hyderabad, Rep. by its Managing Director

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… Appellant/Respondent

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and

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Ch.Laxmaiah

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… Respondent/Writ Petitioner

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THE HON’BLE SRI JUSTICE B.PRAKASH RAO AND THE HON’BLE SRI JUSTICE V.SURI APPA RAO

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Writ Appeal No.928 of 2010

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Judgment: (per V.Suri Appa Rao, J.)

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This writ appeal under Clause 15 of the Letters Patent Act is directed against the order of the learned single Judge in W.P.No.919 of 2004 dated 03-12-2009, wherein the writ petition filed by the respondent herein declaring the action of the appellant herein/A.P. State Agro Industries Corporation Limited (for short, ‘the Corporation’) in not granting 3 months’ notice period terminal benefits for voluntary retirement and also deducting December, 2000 salary from the respondent and also not granting the stagnated increment to him as per G.O.Ms.No.235 Finance and Planning (FW-FR-II) Department, dated 27-10-1998, is arbitrary and illegal

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2. The learned single Judge allowed the writ petition directing the appellant/Corporation to pay the petitioner the salary due to him for

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the month of December, 2000. The Corporation shall recompute the basic salary plus D.A. payable to the respondent duly taking into account the stagnation increment which fell due on 01-12-2000 and pay him the VRS terminal benefits, being the basic pay plus D.A. for the remaining tenure of his service, duly deducting the amount already paid.

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3. Aggrieved by the said order passed by the learned single Judge, the Corporation filed this appeal.

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4. Relevant facts leading to this appeal are as follows:

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The respondent, an Engineer in the Corporation opted for voluntary retirement under “Agro Employees’ Voluntary Retirement Scheme (Phase-II) 2000” floated by the Corporation vide Circular dated 03-10-2000. The Corporation vide proceedings dated 04-11-2000 informed the respondent that his application was accepted and that the notice period shall commence from 30-11-2000. As per the Scheme, the voluntary retirement would come into force from 30-11-2000 from which date, the notice period will come in. He was further informed that his release orders would be issued separately. Thereafter, by proceedings dated 30-12-2000, the Corporation relieved the respondent from his duties w.e.f. 30-12-2000. Subsequently, the Corporation paid the retirement benefits to the respondent as per Government guidelines and as per the entitlement of the respondent.

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5. The grievances ventilated by the respondent in the writ petition are that he was not granted 3 months’ notice period terminal benefits, his salary for December, 2000 had been deducted though he had worked during that month and he was not granted the stagnation increment due to him.

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6. In the Counter Affidavit, the appellant/Corporation contended

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that the cut-off date for calculation of benefits payable to the respondent under the Voluntary Retirement Scheme was fixed as 3011-2000 from which date, his notice period commenced. The Corporation also explained as to how it had computed the terminal benefits payable to the respondent as per the Scheme and stated that it was not correct to say that the respondent had been unlawfully denied payment of the notice period salary. The Corporation also denied the entitlement of the respondent to the stagnation increment claimed by him after the cut off date i.e., 30-11-2000 fixed by the Corporation for calculating the Voluntary Retirement Scheme benefits.

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7. After hearing the learned counsel for both parties, the learned single Judge allowed the writ petition and directed the appellant/Corporation to pay the salary due to the respondent for the month of December, 2000 and to release the stagnation increment, which fell due on 01-12-2000 and to pay VRS terminal benefits for the remaining tenure of his service duly deducting the amount already paid. The appellant/Corporation was further directed to comply with the order within a period of two months from the date of receipt of a copy of that order.

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8. Learned counsel for the appellant/Corporation submitted that as per the Voluntary Retirement Scheme notified in the Circular dated 03-10-2000, the Scheme comes into operation on 31-10-2000 and as per Clause 7(b) of the said Circular, ex gratia benefits are provided. An employee whose request for Voluntary Retirement Scheme is accepted he would be entitled to an ex gratia payment equivalent to 1½ months emoluments (Pay + DA) for each completed year of service or the monthly emoluments (Pay + DA) at the time of retirement multiplied by the balance months of service left before normal date of retirement, whichever is less. The said ex gratia amounts includes notice period of salary. He further contended that as per the Circular,

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the cut off date fixed was

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30-11-2000. On the acceptance of the voluntary retirement the relationship of the employer and employee comes to an end on 30-11-2000. Therefore, the employees are not entitled to the stagnation increments which falls due on 01-12-2000 i.e., after the cut off date. Therefore, the question of computation of voluntary retirement benefits by taking into account the stagnation increments, which falls due on 01-12-2000, does not arise. Therefore, the impugned order passed by the learned single Judge is liable to be set aside.

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9. On the other hand, learned counsel for the respondent/writ petitioner submitted that though the respondent submitted an application on 13-10-2000 informing the appellant/Corporation that he opted for voluntary retirement under the Scheme of the Corporation in its Circular dated

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03-10-2000, the Corporation accepted the option of the respondent and informed him that his notice period shall commence from 30-11-2000. Thereafter, by proceedings dated 30-12-2000 the Corporation relieved the respondent of his duties w.e.f. 30-12-2000. Therefore, the respondent is entitled for the salary for the month of December, 2000. He is also entitled for 3 months’ notice period terminal benefits and also the stagnation increments due to him by 01-12-2000.

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10. Sri G.Vidya Sagar, learned counsel for the appellant/ Corporation, has placed strong reliance on the observations of the judgment of the Hon’ble Supreme Court in A.K. Bindal vs. Union of India^[1] , wherein it is held that the employees having taken advantage for Voluntary Retirement Scheme and having taken the amounts of VRS, cannot raise any claim regarding the non revision of pay scales.

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11. For the purpose of appreciation, it is relevant to extract Clause 7(b) of Circular No.Pers/AM/7287/97 dated 03-10-2000 issued

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by the appellant/Corporation, which provides the following benefits:

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“Ex Gratia benefits

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An employee whose request for VRS is accepted would be entitled to an ex gratia payment equivalent to 1½ months emoluments (Pay + DA) for each completed year of service or the monthly emoluments (Pay + DA) at the time of retirement multiplied by the balance months of service left before normal date of retirement whichever is less.”

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12. Therefore, it is clear from the above Clause that commencement of the notice period is available for the persons with reference to their past service but not for the employees who have opted for Voluntary Retirement under “Agro Employees’ Voluntary Retirement Scheme (Phase-II) 2000”. The respondent herein having opted for Voluntary Retirement Scheme and having taken retirement benefits under the Scheme without any protest and after he was relieved from the duties w.e.f. 30-12-2000, the relationship of the employer and employee had ceased to exist with effect from the date of his relief i.e., 30-12-2000. The respondent, therefore, cannot raise any grievance regarding the stagnation increment, which falls due on 01-12-2000 after he was relieved from the duty on 30-12-2000 i.e. after the cut off date 30-11-2000.

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13. The appellant/Corporation contended that the Corporation has calculated 40 months of left over service of the respondent and accordingly worked out ex gratia amounts payable to him as per the Scheme and the entire amount was paid to him. Therefore, when the respondent was paid salary for the period future due taking into consideration the normal date of retirement, the question of payment of notice period salary does not arise as the respondent is being paid salary till he attains the normal age of retirement without availing his services as if he is in service. The example given in Clause 7(b) of the Circular clearly indicates that an employee, who is put in 24 years of service for normal retirement will get ex gratia amount only for 12

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months emoluments including the notice period salary and not for 36 months emoluments plus notice period salary.

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14. It is, therefore, clear from Clause 7(b) of the Circular, the Corporation has to calculate number of months of left over service for payment of ex gratia amount payable to the employee and once the employee is paid salary for the future due taking into consideration the normal date of retirement as if he is in the service, the question of payment of notice period salary does not arise. As the appellant/Corporation has calculated 40 months of left over service including the month of December, 2000 after the application of the respondent was accepted as the notice period commenced from 3011-2000. The respondent is, therefore, not entitled for the salary of December, 2000 as he was paid salary for 40 months of left over service w.e.f. 30-11-2000, which includes the salary for the month of December, 2000.

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15. In view of the above facts and circumstances, we are of the view that the respondent having opted for voluntary retirement w.e.f. 30-11-2000 and having received the emoluments for 40 months of left over service, he is not entitled for the benefits claimed by him.

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16. In the result, the writ appeal filed by the Corporation is, therefore, allowed by setting aside the impugned order dated 03-12-2009 in W.P.No.919 of 2004 passed by the learned single Judge. No costs.

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_____________________ B.PRAKASH RAO, J. _____________________ V.SURI APPA RAO, J. 18^th February, 2011. Ak

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THE HON’BLE SRI JUSTICE B.PRAKASH RAO

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AND

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THE HON’BLE SRI JUSTICE V.SURI APPA RAO

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Writ Appeal No.928 of 2010 (P.D. judgment of the Division Bench prepared by VSAR, J.)

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18^th February, 2011.

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[1] (2003) 5 SCC 163

The Managing Director, v. Ch.Laxmaiah

Case brief

What is this about?

What did the court decide?

The Managing Director, v. Ch.Laxmaiah

Case brief

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