S. Paul v. Engineers India Limited

1. By this writ petition filed under Articles 226 and 227 of Constitution of India, the petitioner, an ex-employee of the respondent No.1/Engineers India Limited, seeks terminal benefits pursuant to resignation w.e.f. 31.1.1996 on the basis of taking the petitioner as having migrated to Industrial Dearness Allowance (IDA) pattern from Central 2013:DHC:778 Dearness Allowance (CDA) pattern of pay scale w.e.f. 1.7.1991. The sum and substance of the case of the petitioner is that having applied for resignation vide letter dated 1.1.1996 w.e.f. 31.1.1996, he had in the meanwhile on 29.1.1996 applied pursuant to an extant scheme to convert his DA benefit from CDA pattern to IDA pattern, and his resignation having been accepted on 30.1.1996 without in any manner having rejected the request to change to IDA pattern as for by the letter dated 29.1.1996, the petitioner is entitled to pay scale w.e.f 1.7.1991 on IDA pattern.

2. The basic dispute which arises between the parties with respect to petitioner claiming an IDA pattern instead of CDA is that if the petitioner is treated to have resigned w.e.f. 31.1.1996 on IDA pattern then the petitioner will get much larger emoluments, whereas if the petitioner is to get terminal benefits on the basis of CDA pattern, then, the terminal benefits will be lesser than as available in the IDA pattern. Also, this issue can be understood in this manner that if the petitioner is allowed changing of DA pattern from CDA to IDA as the same results in grant of higher pay scale, would then the respondent No.1 be said to have accepted the resignation consciously and deliberately taking the petitioner to be entitled to IDA pattern instead of CDA pattern?

3. The undisputed facts of the present case are that the petitioner was appointed by the respondent No.1 on 27.5.1977 as an Assistant Engineer. Petitioner as on 1.1.1996 was holding the post of Senior Manager in the respondent No.1. The respondent No.1 from time to time gave benefit to its employees for change of CDA pattern to IDA pattern, and the last of such circular is dated 29.1.1996. The employees of the respondent No.1 in terms of this circular dated 29.1.1996 were asked to exercise their option on or before 29.2.1996. The petitioner though had already applied for resignation of the company vide application dated 1.1.1996 for resignation w.e.f. 31.1.1996, on 29.1.1996 itself when the said circular 4 of 1996 dated 29.1.1996 for exercise of the option came into force, applied, although he was going to resign within two days. Petitioner was communicated the acceptance of his resignation vide letter dated 30.1.1996 of the respondent No.1. Petitioner therefore was held to have ceased to be an employee of the respondent No.1-compnay on account of his resignation w.e.f 31.1.1996. Subsequently on 8.2.1996, the Senior Manager (Personnel) of the respondent No.1 informed the petitioner that his request for changing of his DA pattern from CDA to IDA was accepted. Thereafter, the respondent No.1, it seems did not release the dues and deducted an amount of about Rs. 91,574/- from the gratuity entitlement of the petitioner on account of house building advance taken by the petitioner and the petitioner objected to this. The petitioner was not paid his dues and ultimately the respondent No.1 vide its letter dated 12.12.1996 informed the petitioner that the petitioner could not be granted IDA pattern in terms of his request dated 29.1.1996 on the ground that the benefit of circular 4 of 1996 dated 29.1.1996 would only apply to the existing employees of the respondent No.1 and not for those employees who had applied for ending of their services by resigning from the respondent No.1-company. In sum and substance, by the letter dated 12.12.1996, the respondent No.1 pleaded that there was an administrative error in issuing the letter dated 8.2.1996 to the petitioner conveying the change from CDA pattern to IDA pattern and which communication it was urged, is ex facie shown to be erroneously issued because the petitioner was addressed as an existing employee of the respondent No.1 i.e as a Senior Manager (Marketing).

4. The limited issue which therefore calls for decision in the present case is whether the respondent No.1 had in fact consciously allowed the petitioner to change his DA pattern from CDA to IDA before his resignation came into effect w.e.f. 31.1.1996. Whereas the petitioner pleads that inasmuch as before the letter dated 30.1.1996 was issued to the petitioner communicating the acceptance of resignation, no communication was addressed rejecting the request of the petitioner dated 29.1.1996 to convert from CDA pattern to IDA pattern, thus he is entitled to IDA pattern because if the refusal was given to the petitioner before 31.1.1996 then he may not have resigned w.e.f. 31.1.1996. The respondent No.1 on the other hand contends that the letter dated 8.2.1996 was issued by an administrative error and therefore the petitioner cannot be given benefit of the conversion from CDA pattern to IDA pattern. The basic reason for the arising of the dispute is that if the petitioner is held to be entitled to change to IDA pattern he will have a higher pay scale w.e.f 1.7.1991 and thus much larger terminal benefits. If pay scale is higher then the gratuity is higher because gratuity is linked to a particular number of months of pay for each year of service rendered with the employer/respondent No.1. If the petitioner therefore gets the IDA pattern his scale of pay will be higher and therefore he becomes entitled to a high gratuity amount, but if the petitioner is treated as having resigned without the CDA having been accepted and petitioner being treated only on IDA pattern, his scale of pay will be lesser/lower, and therefore his terminal benefits including gratuity would be lesser/lower.

5. To determine this aspect, it would be necessary to refer to relevant rules of the respondent No.1 which deals with the methodology and control with respect to resignation cases. This methodology is provided in a Manual of the respondent No.1 titled as “Procedure for Processing of Separation Cases” and para 5 with its sub paras 5.1.1. to 5.1.13 are relevant and the same read as under:- “5.0 METHODOLOGY AND CONTROLS 5.[1] METHODOLOGY FOR PROCESSING OF RESIGNATION CASES 5.1.1. On receipt of registration letter submitted by an employee (to the HR dept), the dealing person checks whether the same is routed through Dept. Division & Directorate Head and date of receipt of resignation in the dept/division has been marked clearly. The date of receipt of the application is the date on which the employee’s supervisor/senior endorses the application. 5.1.[2] Dealing person fill the information in the window under resignation head in the separation admin portal. 5.1.[3] The dealing person generates the IOM for stoppage of salary and sends it to F&A dept. and other concerned departments. The detail of outstanding and payable dues is sought from F&A dept in a format generated online alongwith above mentioned IOM. The resigning employee is advised to deposit the amount in lieu of shortfall in required notice period (if any) and produce the payment receipt of the same to HR dept. 5.1.[4] Note for seeking Legal and vigilance clearance is generated through separation admin portal and sent to legal and vigilance department for obtaining clearance. 5.1.[5] In case there are recoveries to be made, the employee is advised to clear the same. Alternatively, if employee so requests, the recoveries can be adjusted against his Gratuity entitlement or/and PF accumulations. The employee is advised to fill the concerned withdrawal form as well as authority letter for deduction in advance. 5.1.[6] The online system provides the convenient filling of all the information, settlement forms, clearance form and other feedback related forms through separation portal wherein separating employee is advised to login and fill all the concerned forms Employee takes the prints of these forms and formats for obtaining clearances and settlement of his dues. 5.1.[7] On receipt of duly filled PF/Gratuity forms (all in duplicate) and DCS Scheme form (in triplicate) dealing person generates a note for acceptance of resignation mentioning all the relevant facts about (i) vigilance clearance, (ii) disciplinary action clearance, (iii) HBA, (iv) Other loans & advances, (v) shortfall in notice period (if any) (vi) PF, Gratuity, EL etc (vii) action on recoveries (if any). This note is reviewed by the supervisor (of dealing person) and put up to the Competent Authority for approval. 5.1.[8] Dealing person gets exit interview conducted. 5.1.[9] On receipt of the approval from Competent Authority dealing person communicates the acceptance of resignation to the separating employee through a letter which is generated online through separation admin portal. 5.1.10 The employee submits the departmental clearance certificate to the dealing HR person who then forwards the same to F & A dept alongwith gratuity forms and a copy of resignation acceptance letter. PF/DCS Scheme forms are forwarded to PF/DCS Trust. One copy of the acceptance letter and each of the documents is forwarded to PD section for retaining in Personal Dossier. 5.1.11 Every month the dealing person follows up with Accounts Department in respect of status of full and final settlement of separated employees in last 3 months. Note: In case of employee posted at Site Offices/ROs/Inspection Offices etc, the resignation letter is forwarded to FPC through respective RCM/Head of Office etc for further action. 5.1.12 On receipt of the final settlement certification from F & A Department the dealing person issues the Service Certificate generated online. 5.1.13 The online package provides access to the supervisor of the dealing person to monitor the processing of the separation cases.” (emphasis is mine).

6. If we refer to the aforesaid relevant rules pertaining to resignation cases, it becomes clear that the acceptance of resignation has to be a conscious and deliberate act of the respondent No.1 and thus the respondent No.1 is entitled even to refuse the resignation sought by an employee. Sub paras 5.1.[9] and 5.1.10 make it very clear that there is very much required approval of the concerned authority with respect to acceptance of resignation and this acceptance of resignation has to be communicated to the concerned employee. Therefore acceptance being a deliberate and conscious act, if the acceptance of resignation is given by the respondent No.1 without being fully conscious and alive with respect to all the facts, it cannot be said that the acceptance of resignation by the respondent No.1 is final so far as the petitioner is concerned. What I mean to say is that if acceptance of resignation is a conscious decision, consciousness will only exist if the authority communicating the acceptance of resignation (and more particularly the letter dated 8.2.1996 advising change of pattern from CDA to IDA) is done being fully aware of all the relevant facts of the case.

7. In my opinion, there are five crucial documents to decide this aspect, and these are letters dated 29.1.1996 of the petitioner to respondent No.1, letter dated 30.1.1996 of respondent No.1 to the petitioner, letter dated 8.2.1996 of the respondent No.1 to the petitioner, letter dated 7.6.1996 of the respondent No.1 to the petitioner and finally the letter dated 12.12.1996 of the respondent No.1 to the petitioner. These five communications read as under:i) “Letter dated 29.1.1996 29 January 1996 Shri B.M.Prasad Sr. Manage (Personnel) EIL New Delhi Sub Shifting from CDA to IDA. Dear Sir, This has reference to your circular No.770.208(4/96) dated 29.1.1996. As per the circular, I wish to exercise my option for shifting from CDA pattern of salary to IDA pattern w.e.f. 1.7.1991. Necessary adjustments I my salaries, other emoluments and perquisites may please, therefore, be made. Thanking you, Yours truly S.Paul Sr. Manager (Mktg.) Emp. No.3625. ii) Letter dated 30.1.1996 No.740.3625 January 30, 1996 Shri S.Paul (3625) Senior Manager (Marketing) Engineers India Limited New Delhi Dear Sir, Please refer to your letter of resignation dated January 1, 1996, requesting for release on January 31, 1996. As requested, your resignation from the post of Sr. Manager has been accepted by the competent authority w.e.f. the afternoon of January 31, 1996. You are required to settle your account and produce a clearance certificate from all concerned as per proforma already supplied to you. We are advising Accounts Deptt. to settle your account for and upto January 31, 1996, subject to the aforesaid stipulations. Service certificate shall be issued to you on your producing a final clearance from the Accounts Department. Very truly yours, (K.L.BHATT) Dy. Manager (Personnel) BCC: - Shri A.K. Bangerjee, GM (marketing) - Accounts, N. Delhi –Forwarded herewith are Gratuity Application Form & Gratuity Authorisation for necessary adjustment of Shri S Paul’s account in EIL. - Secretary, PF Trust – Necessary PF Authorisation and PF Settlement Form have been submitted by Shri S Paul for adjustment of his loan liabilities. These will be forwarded to your after two months as per your requirement. - DGM (Admn) - DGM (HR) - S/Shri T C Arora/S K Chakraborty/M L Tanwar - PD - Diary iii) Letter dated 8.2.1996 No.740.3625 Date: 8.2.96 Mr. S. Paul (3625) Sr. Manager - Marketing EIB – 11th Hr. Subject: Exercise of option for shifting to IDA pattern of salary structure w.e.f. 1.7.1991 in terms of Circular No.26/92, 1/94 & 4/96 Dear Sir, Kindly refer to your application on the above mentioned subject. Your pay as on 1.7.91 has been fixed at Rs.6150/- (Basic Pay) and Rs._____ (Personal Pay) in the pay scale of Rs.4600-6790. The Basic Pay beyond 1.7.91 shall be notified to you at a later stage since the scale of pay in IDA pattern is revised w.e.f. 1.1.92. Accounts Deptt. has been duly advised to regulate payment of your pay and allowance accordingly. In case you are already in receipt of conveyance allowance on Car/Scooter etc the arrears of the same shall be payable to you on your furnishing the necessary certificate in the enclosed proforma indicating that you have been spending not less than the entitlement on maintenance of your vehicle. In case you are already in receipt of the Children Education Allowance, the arrears of the same shall be payable to you on your furnishing the certificate attached. (B.M. Prasad) Sr. Manager (Pers.) Encl: As above iv) Letter dated 7.6.1996 No. EIL/AC/PR/96-97/3625/ June 7, 1996 Shri S. Paul, B-12-C, Gangotri Enclave, Alakhnanda. New Delhi-110019 Subject: Payment of outstandings. Dear Sir, Reference your resignation which has been accepted by the competent authority w.e.f. 31.1.96 (AN). In this connection, you are informed that an amount of Rs. 91,574/- is still outstanding from you towards house building advance after adjustment of your leave encashment and other payments. You are requested to clear the outstanding so that your clearance certificate may be released at the earliest. Thanking you, (A. Dhingra) Manager (F &A) v) Letter dated 12.12.1996 REGISTERED December 12, 1996 Shri S Paul, B-12C, Gangotri Enclave, Alaknanda-B, New Delhi.