Sanjay Kaura v. Air India Limited

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 respondentmanagement under section 7(7) of the Payment of Gratuity Act, 1972 (“the Act”) impugningordersdated 21st May, 2018and25th May, 2018(“ordersof the Controlling Authority”) passed by the Controlling Authority under the Act and Assistant Labour Commissioner (“Controlling Authority”). In the claim applicationsfiled by thepetitioners, orders oftheControllingAuthority had directed the management to pay the gratuity amount of Rs.3,43,073/alongwith simpleinterestat the rateof 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, 2013in favourPetitioner No. 2 for delayedpayment. 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 W.P.C 768/2019 & W.P.C 770/2019 3/19 respectively. Videlettersdated 7th December, 2000 and22nd December, 2000 the petitioners were suspended from their services with respondentmanagement 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 withsections380, 408,419, 420,467, 468, 471, and511 oftheIndian PenalCode, 1860in which charge sheet hadalsobeen 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 personshad hatcheda planin theyear 1999 totakeoutthestockof Cash Value Documents (“CVDs”) unauthorisedly from IAL and thereafter illegally enriched themselves by getting tickets cancelled and refunded from various IAL stations.

3. On thebasisofan enquiry report pertainingtothesaid allegations, show cause notices were issued to the petitioners proposing penalty of ‘dismissal from servicewithoutterminalbenefits. After consideringthereplies 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 Managementwhich came to be rejected vide letters dated 21st June, 2013and 31st July, 2013. In August, 2014, the petitioners raised an industrial dispute challengingtheir wrongfuldismissalwhichis stillpendingadjudication before W.P.C 768/2019 & W.P.C 770/2019 4/19 theCentral Government Industrial Tribunal, Delhi. In themeantime, in May, 2017 they filed an applicationbeforetheControllingAuthority under theAct for paymentoftheir gratuity. Videordersdated 21st May,2018and25th May, 2018, the petitioners’ applications for payment of gratuity were allowed by the Controlling Authority. The respondent-management filed an appeal against thesamebeforethe AppellateAuthoritywhich set asidethe orders of the Controlling Authority by way of the impugned decisions. Submissions on behalf of the Petitioners

4. Learned counselfor the petitionerhas assailed theimpugned 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 counselfor the petitionerrelied upontheobservation of the Controlling Authority where it was noted that it was an admitted casethat no show causenoticefor forfeitureofgratuitywasever issued. Reliance was also placed on the decision of theHon’bleCalcuttaHigh Court in IndianIron and SteelCompanyv. HimangshuBikash 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 management’s assertionthattheservices of the employeeshad been terminated for an act which constituted an offence involving moral turpitude and W.P.C 768/2019 & W.P.C 770/2019 5/19 committed by them during the course of their employment. Learned counselfor thepetitioner submitted thateven assumingthatthealleged offence involved moral turpitude, it had not led to any conviction and had not been proved in accordancewith law yet. In this regard,hedrew the Court’s attention to the FIR lodged by CBI in 2000 and the charge sheet filed subsequently,however,no charges have been framedagainst the petitioners till date, even after the passage of over 20 years. 4.[4] Forfeitureofgratuityunder section 4(6)(a)oftheAct involvesan assessmentof damagefor 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 wereapproximatelyRs.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 SafdarjungAirport. It was submittedthat themanagementalreadyhad a security which was more than the purported loss. Pertaining to this, he relied upon the decision of the Hon’ble Supreme Court in Jaswant Singh Gill v. BharatCoking CoalLimited (2007)1 SCC 663 where it was held that forfeituremay only bedonein cases wheretheemployee has been convictedfor anoffenceinvolvingmoralturpitude. Hefurther relied upon the decision of this Court in Surendra v. Syndicate Bank, 2019 (161) FLR 292 and the decision of Hon’ble Supreme Court in W.P.C 768/2019 & W.P.C 770/2019 6/19 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 alongwith the petitioners. Thus, forfeiture of gratuity of the petitioners, it was contended, was tantamount to unequal treatment and, violative of Article 14 of the ConstitutionofIndia, 1950, particularly, sincehe was an alleged co-delinquent. Submissions on behalf of the Respondent

5. In response, learned counsel for the respondent submitted as under: 5.[1] Thequestionraised bythepetitionersin thepresentwrit petitions were academic in nature, especially at this stage, considering that the criminalcourt ofcompetentjurisdictionwas stillseized of proceedings in the said FIR registered by the CBI. Only upon culmination of trial and the criminalprocess, could thepetitionerslay 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 thefacts therein aredistinguishable inasmuch as, in the said case, therewas a bipartitesettlementwhich providedfor W.P.C 768/2019 & W.P.C 770/2019 7/19 forfeitureonly if themisconduct, leadingto dismissal, caused financial loss to themanagement/Bank. In light ofsuchsettlement, theCourtheld that section 4(6)(a) and (b) of the Act are to be read together, and forfeitureofgratuityis permissibleonly to theextentoftheloss caused by thedelinquent employee. As no losswascaused, grantingprotection of the bipartitesettlement, it was held that gratuitycannot beforfeited. The said decision also cemented that forfeiturewas permissibleonly if terminationofthe employeeis due to misconduct involvingan offence of moral turpitude and subsequent conviction by a court of competent jurisdiction. Respondent’scounselhad no quarrelwith thesubmission of thepetitioners’counselinasmuch as conviction is necessaryfor any forfeitureofgratuity.However, it was contendedthat as thepetitioners havenot been convicted by thecriminalcourt yet, thepresentpetitions 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 distinguishedon thebasis that the disciplinary authority in that case had not quantified the loss / damage and therefore, forfeiture was disallowed. In the instant cases, the managementhad quantified thefinancialloss at Rs.6,67,390/-each which was evidentfromthechargesheet dated11th February, 2003filed W.P.C 768/2019 & W.P.C 770/2019 8/19 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] Respondent’s 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,thepetitioners, in connivancewithother 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. Thepetitionersreceived a bundleof100 blank manualIndian Airlines doublesectorticketswhich weretakenout unauthorisedlyfrom 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 respectivelywhich referred to the charge sheets dated 11th February, 2003 and report of the Enquiry Officer dated 14th September, 2010and12th October,2010respectively. The said memoranda noted the petitioners’ comments had been received and considered by thedisciplinary authoritywho had perused theentirecase, examined thereportanddocuments andconcurredwith the findings of the Enquiry Officer. He further stated that due to the gravity of acts of omission and commission, a major punishment was W.P.C 768/2019 & W.P.C 770/2019 9/19 proposedto beimposed and accordingly, dismissalfrom services ofthe company with immediate effect without any terminal benefits, was notified as proposed punishment.In thesememoranda, it is specifically stated that, “you areadvised to show cause within seven daysof receipt thereof as to why the proposed punishment should not be imposed on you.”. Respondent’s counsel, therefore, stated that since there was no set format under the Act for issuance of show cause for forfeiture of gratuity, principles ofnaturaljusticewere already complied with as the petitioners were provided an opportunity to object to the punishment proposed. 5.[6] Respondent’s counsel further pointed out that the petitioners’ dismissalwas challenged before the Ld. Labour Courtand order dated 10th August,2018was passedstatingthat theenquiry conductedby the Enquiry Officer was in violation of principles of natural justice since themanagementhad notexamined thewitnesses andadduced evidence. It was held that the management had reserved its rights to adduce evidence on merits and therefore, an opportunityoughtto begranted 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 wherean order dated 3rd July, 2019 waspassed. 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 W.P.C 768/2019 & W.P.C 770/2019 10/19 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, thematterwasremandedback to theIndustrial 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 andan orderdated 16th February, 2022waspassedby theLd. PresidingOfficer rejectingthearguments advanced by themanagement 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 notedthattheLd. PresidingOfficer had ignored the direction of this Courton 3rd July,2019(as noted above). This Court then videorder dated 24th August, 2022, directed thattheTribunalshould examinethe matter afresh in terms of the principles laid down by Court in State Bank of Travancore (supra)and if the determinationis found to be on thebasis ofloss ofconfidence, theclaim of workers should beconfined only to compensation. Iffound thattheremovalwas noton thebasisof W.P.C 768/2019 & W.P.C 770/2019 11/19 loss ofconfidence, onlythen wouldtheTribunal proceed withrecording of the evidence. 5.[8] Pursuantto this direction, theLd. PresidingOfficer of theCGIT 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 respondent’s counsel, the decision of the managementto terminatethe services of the petitioners on thebasis 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 theplea takenby thepetitioners withrespectto parity with Sh. Sukhbir SinghSangwan onaccount ofpayment ofgratuityand all other terminal dues to his legal representatives, the respondent’s counsel pointed out that the same was done only because Sh. Sukhbir Singh Sangwan hadexpired even beforethedisciplinaryauthoritycould 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 managementhad shifted its standfrom ‘termination dueto misconduct’ofthe petitioners to ‘loss of confidence’, however, forfeiture of gratuity cannot be premised on termination based on loss of confidence. By having improvised W.P.C 768/2019 & W.P.C 770/2019 12/19 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 involvingmoralturpitude, havingcommitted thesame duringthecourseof their employment. Referencefor 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 conductor any other act of violence on his part, or

(ii) if the services of such employee havebeen 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.” W.P.C 768/2019 & W.P.C 770/2019 13/19

8. It is evident that thecharges were framed against thepetitionersby 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 opportunityto representtheir 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. Issuethen arises of showcausenoticeto thepetitionersfor forfeitureof gratuity. The respondent/management contended that there is no specific format ofnoticewhich is prescribed undertheAct for thepurposeofforfeiture of gratuity. However, what would be relevant is whether the principles of naturaljusticewereadhered to. It is not denied that letters datedon 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 deliberatingfurther on thenecessity of a specific and separatenoticeto be issued under theAct for forfeiture, in view of thenotice W.P.C 768/2019 & W.P.C 770/2019 14/19 of dismissal of services without any terminal benefits being given above; as also in light of opinion ofthis Court on the legality of the forfeitureitself (as elaborated hereunder).

11. It is not denied that an FIR was lodged by theCBIin 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 ofthesaid FIR andchargesheet.This, however,cannotbea reasonto 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 ofand assailthis longdelay 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, decidewhether or not toframecharges andas towhetherthepetitioners haveto 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 petitionersnotbeingconvictedat this stage, permitthemanagement toinvoke section 4(6)(b)(ii) of theAct for forfeitureofgratuity. 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 damageor loss caused to the Bank. In case, W.P.C 768/2019 & W.P.C 770/2019 15/19 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 undersub-Clause(b)ofsub-Section (6), theforfeitureof gratuity, either whollyorpartially, is permissible undertwo situations– (i) in case the termination of an employee is on account of riotous or disorderly conductoranyotheract 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 accountof-(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 accountany act which constitutes an offence involving moralturpitudecommitted duringthecourseof employment.