Mother Dairy Fruit and Vegetable Pvt Ltd v. Satpal Singh

2. Whether the Respondent is eligible for the gratuity along with interest for delay in payment?

7. The Appellate Authority held that Section 4 (6) of the Act is not attracted to the present case and gratuity payable to the respondent under the act cannot be withheld or forfeited. In support of this finding, reliance was placed on the judgment of this Court in Mohd. Shabbir Nadvi vs. Jamia Millia Islamia 56 (1994) DLT 583, Texmaco Limited vs. Ram Dham and Anr., Civil Writ Petition No.1110 of 1989, Gella Ram Vaswani and Anr. Vs. Municipal Corporation of Delhi 2005 (104) FLR 643 (Del.HC) as well as the judgment of Calcutta High Signing Court in Eastern Coal Fields Ltd. Vs. Kripa Sankar Somany and others (Reported in LLJ IIIp. 375 2004), judgment of Bombay High Court in AS Iyer vs. Union of India &Ors. 2004 I LLJ 885 and finally, the judgment of the Supreme Court in Dr. Shittla Prasad Vs Gorakhpur University –SCC1589 (1994). Appellate Authority confirmed the order of the Controlling Authority and inter alia held that the action of the petitioner/company to forfeit the gratuity was not correct. Respondent/workman was found to be eligible for gratuity on the date of termination of service i.e. 02.05.2016. It was further held that since the payment of gratuity was not made, the period was to be treated as a delay in payment of gratuity and therefore the award of interest was also upheld.

8. The petitioner/company has assailed the orders of the Controlling Authority and the Appellate Authority by way of the present writ petition on the ground that the authorities below have passed the impugned order contrary to the facts and the law.

9. In the writ petition, it has been stated that the authorities below have not conducted a detailed and proper examination of the material and the orders under challenge are pervert orders. It has also been pleaded that the Appellate Authority has ignored and failed to appreciate that the respondent’s services were terminated on four main grounds that run parallel and simultaneously independent of each other. The fulfilment of any of these grounds entitles the petitioner/company to forfeit the gratuity of the respondent/workman. The following are the four main alleged grounds for termination: Signing

(i) Commission of an offence of sexual harassment and molestation against the daughter-in-law of another employee Sh.Umesh Choudhary in Mother Dairy Complex;

(ii) Causing violence and disturbance of peace and tranquility and putting lives of Sh. Umesh Mishra and his family members under danger;

(iii) Levelling false and baseless allegation against the management and its officers; and

(iv) Disobedience of the direction to vacate staff quarter.

10. It has been stated that the charges against the respondent/workman constitute violence and disorderly conduct and thus he has made himself liable to get his gratuity forfeited by the petitioner/company under Section 4 (6) (b) (i) of the Act. It has also been stated that as per Section 4 (6) (b) (i) of the Act no additional or conditional requirement is needed for forfeiture of gratuity of Respondent/workman. The petitioner /company has also stated that gratuity is not a fundamental right of the employee and the management has a right to withhold or forfeit the gratuity either wholly or partially for disorderly behaviour. Reliance has been placed upon B.R. Sharma Vs. Syndicate Bank, LPA No.1780/2016 (Delhi High Court) and Management of Tournamulla Estate Vs. Workmen AIR 1973 SC 2344.

11. In Management of Tournamulla Estate (supra), the Supreme Court has held that in case of serious misconduct such as violence against the management or other employees or riotous or disorderly behaviour in or near the place of employment which though not directly causing damage is conducive to grave indiscipline. In view of this, the Signing petitioner/company has stated that the gratuity of the respondent/workman can be forfeited in its entirety

12. Further, it has been stated that the Appellate Authority has also failed to appreciate that the gratuity of Respondent/workman was liable to be forfeited by the Petitioner/company under Section 4(6)(b)(ii) Payment of Gratuity Act, 1972 as the act of sexual harassment by the Respondent/workman amounting to an offence involving moral turpitude was committed in Mother Dairy Complex which consists of the plant, offices and quarters.

13. The petitioner in the writ has also stated that the appellate authority ignored the findings of Learned ACMM (Spl. Acts) (Central), Tis Hazari, in the criminal complaint bearing C.C. No. 2928/2017 titled ‘Mother Dairy Fruit & Vegetable Pvt. Ltd.Vs. Satpal Singh’ whereby the respondent/workman was found guilty under Section 452 r/w Section 435 Companies Act, 2013 and was directed to vacate the premises. Similarly, learned ADJ-03 (South) Saket Court, Delhi, in the suit bearing Civil Suit no. 3228/2016 for eviction, possession and recovery titled as Mother Dairy Fruit & Vegetable Pvt. Ltd. Vs.Satpal Singh has also passed an order of eviction vide order dated 27.01.2020. It has been submitted that in pursuance to the order dated 27.01.2020 in Civil Suit No.3228/2016, the proceedings for recovery of mesne profits are still in progress. It has been submitted that since the quantum of mesne profit is still to be ascertained and after quantification, the loss of mesne profit can only be recovered from the gratuity of the respondent/workman thus the Petitioner is entitled and justified in withholding the gratuity. The petitioner has relied on the order passed Signing by the Supreme Court in Steel Authority of India Vs. Raghbendra Singh & Ors in SLP No. 11025/ 2020 wherein it was held that if an employee occupies a quarter beyond the specified period, the penal rent would be the natural consequence and such penal rent can be adjusted against the dues payable including gratuity. Reliance has also been placed on the judgement in Secretary ONGC vs. V.C Warrior AIR 2005 SC 3039, wherein the Supreme Court has inter alia held that the High Court was unjustified in holding that appropriation of gratuity amount for unauthorized occupancy of the quarter was illegal and that penal rent would be charged from the employee. It has been stated in the writ petition that the Appellate Authority has erred in holding that the non-vacation of the staff quarters cannot be ground for denial of gratuity solely on the basis of some inapplicable judgments in the present case.

14. The petitioner/company has distinguished the judgements relied on by the Appellate Authority on the ground they are either relating to gratuity for unauthorized occupation of quarter after retirement or death of the workman or otherwise whereas in the present case one of the grounds for termination of service was the unauthorized occupation of the property i.e. quarter of the petitioner/company and such unauthorized occupation amounts to damage or loss to the petitioner/company and thus the gratuity of the respondent/workman is liable to be forfeited by the petitioner as per Section 4 (6) (a) of the Act.

15. Learned counsel for the petitioner has submitted that during the pendency of the proceedings, the judgement of conviction of the Signing learned ACMM dated 18.01.2020 in C.C. No. 2928/2017 under Section 452 read with Section 435 of Companies Act, 2013 has also been upheld vide order dated 17.12.2021 by the learned ASJ (Spl Acts) (Central), Tis Hazari in Crl.Appeal No.75/2020. Learned counsel for the petitioner has further submitted that unauthorized occupancy of the quarter causes loss to the employer and the respondent/workman is in unauthorised occupation of the staff quarters to date and has not paid penal market rent as required under clause 17 of the License Deed. It has been submitted that the loss of prevailing market rent since 06.02.2016 is still pending and is increasing. The Market Rent was 7000/- pm in 2016 which has now increased by around 14000/- to 15000/- pm. It has been submitted that in Suit no. 3228/2016 a prayer for mesne profit against the unauthorized occupation of the quarter by Respondent/workman was made. The said suit was filed in 2016 while the Respondent had filed the application for recovery of gratuity later in 2019.

16. Learned counsel has submitted that one of the grounds for the termination of Respondent’s services was his commission of an offence of sexual harassment and molestation against the daughter-in-law of another employee of Petitioner/company living in Mother Dairy Complex causing violence and disturbance of the peace and tranquillity in the complex. It has been submitted that the respondent/workman has also levelled false and baseless allegations against the petitioner/company and despite repeated requests did not vacate the staff quarter. The said acts of the respondent/workman constitute violence and disorderly conduct on the part of the Signing Respondent/workman and thus the Respondent/workman has made himself liable to get his gratuity forfeited by the petitioner/company under section 4 (6) (b) (i) of Payment of Gratuity Act, 1972. It has been submitted that in terms of Section 4(6)(b)(i), no additional or conditional requirement is needed for forfeiture/ withholding of gratuity of Respondent

17. It has been submitted that the case of the petitioner also falls under Section 4(6)(b)(ii) of Payment of Gratuity Act as the offence of sexual harassment committed by the Respondent/workman in the enclosure of Mother Dairy Complex consisting of plants, offices and staff quarters amounts to an offence involving moral turpitude being committed in the complex of staff quarter which was allotted to him by virtue of his employment and which is near the workplace. An FIR u/ sec 354 IPC has also been lodged by the victim against the Respondent/workman.

18. Learned counsel for the petitioner has also submitted that the application for payment of gratuity was filed at a belated stage therefore the rate of interest should not have been awarded more than the interest notified by the Central Government, which is much lower than the awarded rate of interest @ 10% p.a.

19. Per contra, learned counsel for the respondent/workman has submitted that Controlling Authority and Appellate Authority have returned a concurrent finding that Section 4 (6) of the Act is not attracted in the present case and therefore the gratuity payable to the employee cannot be withheld. It has been submitted that in absence of perversity in the concurrent findings given by the two authorities, the present writ petition is not maintainable. Signing

20. It has also been submitted that the dismissal order passed by the petitioner company is pending adjudication before the learned CGIT in LIR No.291/2018. It has also been submitted that the respondent/workman has an injunction order passed by the Ld. Senior Civil Judge (East), Karkardooma Court, Delhi in Civil Suit NO. 05/2016 regarding his possession of the Staff Quarters. He has therefore continued to be in the possession of the staff quarters by virtue of the said interim injunction.

21. Learned counsel for the respondent has submitted that he has not been convicted by any court of law and the trial in FIR No.107/2016 is pending adjudication. Further, the said incident which is the subject matter of FIR no.107/2016 never belonged to the workplace of the respondent/workman in any manner nor was committed during the course of employment with the petitioner. It has further been submitted that the alleged act of quarrel was committed with the neighbour while off duty, and therefore cannot be treated as an act done during the course of his employment for the purposes of section 4 (6) (b) of the Payment of Gratuity Act, 1972.

22. Learned counsel for the respondent has submitted that Controlling Authority and Appellate Authority has rightly relied upon the judgments of Mohd. Shabbir Nadvi (supra), Texmaco Limited (supra), Gella Ram Vaswani (supra) and Dr. Shittla Prasad (supra). It has been submitted that occupation of a staff quarter (accommodation provided by the employer) even though in an unauthorized manner is not a valid ground to forfeit the gratuity. Learned counsel has submitted that it has been held in H. Signing Gangahanume Gowda vs Karnataka Agro Industries Corpn. Limited, (2003) 3 SCC 40 that payment of gratuity with or without interest, as the case may be does not lie in the domain of discretion and it is a statutory compulsion. Learned counsel has submitted that benefits given through socially beneficial legislation cannot ordinarily be denied and employees on retirement have the right to get gratuity. Any delay in payment of gratuity must be visited with the penalty of payment of interest.

23. I have considered the submissions made by both parties. At the outset, it is essential to discuss the scope of judicial review by this court in the exercise of the writ jurisdiction. The jurisdiction of the writ court under Article 226 has been laid down in Swaran Singh& Anr. Vs. State of Punjab & Ors 1976 (2) SCC 868. The Supreme Court has inter alia held as under:

24. It is a settled proposition that the High Court while exercising power under Article 226 of the Constitution of India does not sit as an Appellate Authority in the matter arising out of the Labour Courts, Tribunals and Quasi-Judicial authorities. The High Court only has the power of superintendence over such courts, tribunals and authorities The power of judicial review does not include re-appreciation of the whole dispute afresh and does not empower the High Courts to reach a different conclusion if the tribunal below has given sufficient reason for reaching to its conclusion. Repeatedly, it has been held that while exercising power under Article 226, the Court only has to see whether there is an error of jurisdiction or whether there is an excess of jurisdiction. The High Court can also examine the order under challenge if there is any perversity in the findings challenged before it but it cannot replace its view only because another view is possible.

25. The Controlling Authority and Appellate Authority have no doubt relied upon various judgments wherein it has been held that the gratuity cannot be withheld for non-vacation of the accommodation allotted to Signing an employee. However, the precedents have to be applied and seen in the peculiar facts and circumstances of the cases.

26. In the present case before proceeding further it is desirable to take note of a few facts. The charge sheet was served upon the respondent/workman on 08.02.2016 which culminated in an enquiry report dated 16.02.2016 vide which all the charges against the respondent/workman were held to be proved. This led to the termination of the respondent/workman vide order 02.05.2016. The dismissal order is pending adjudication before learned CGIT vide LIR No.291/2018. The respondent/workman has also filed a Civil Suit no.5/2016 seeking relief of declaration, mandatory and permanent injunction in which an interim injunction was granted vide order dated 28.10.2017. The petitioner/ management on the other hand had filed a complaint under Section 452 read with Section 433 of the Companies Act, 2013 wherein the respondent/workman was held guilty and was convicted for the offence. He was sentenced to pay a fine of Rs.[2] lakhs and in default to undergo SI for six months vide order dated 18.01.2020. The appeal filed against this order i.e. Crl.Appeal 75/2020 was dismissed vide order dated 17.12.2021 and is now under challenge before this court in Crl.Revision No.83/2020 filed by the respondent/workman.

27. Thus, it is clear from the record that the respondent/workman has not vacated the staff quarter allotted to him despite various directions of the authorities. Though it cannot be denied that he has all the opportunities to pursue the legal remedies provided to him by law but this court Signing while deciding a lis pending before is also required to see the practical realities and the difficulties faced by a common man.

28. It is a matter of common knowledge that the accommodations provided to the employees by employers are limited in number. Such accommodations are allotted subject to certain conditions and the number of available accommodations is always far below than the requirement. Therefore, there are numerous persons in the queue awaiting the allotment of accommodation. This court will not make any comment on the termination order or the grounds for the termination as it is pending disposal before learned CGIT. However, one fact is clear on the record that as of now the respondent/ workman has not vacated the quarter allotted to him to date. The proceedings for quantification of mesne profit and damages are still under progress. If ultimately the dismissal order is upheld in the judicial forum and the respondent/workman is found liable to pay market penal rent/market rent, certainly, there will be proceedings for the recovery of the same. The courts have said time and again that the payment of the gratuity is a statutory right and it is not subservient to the common law rights of the employer to terminate the service of an employee.

29. I consider that this matter is also required to be seen from another perspective. Section 4 (6) (a) and (b) provides as under: “Section 4 - Payment of gratuity. …..(6) Notwithstanding anything contained in sub-section (1),— (a) the gratuity of an employee, whose services have been terminated for any act, wilful omission or negligence causing any damage or loss to, or destruction of, property belonging to the Signing employer, shall be forfeited to the extent of the damage or loss so caused; (b) the gratuity payable to an employee 5 [may be wholly or partially forfeited]—

(i) if the services of such employee have been terminated for his riotous or disorderly conduct or any other act of violence on his part, or

(ii) if the services of such employee have been 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.

30. In Union Bank of India and vs. D.C.Chaturvedi and anr. W.P.(C) 4486/2021, this court dwelt upon the procedure for forfeiture of gratuity wherein it has been inter alia held that the payment of gratuity is the rule and not the exception. It was further inter alia held that for the exception to be applied, the pre-condition of notice, quantification and hearing would have to be followed and satisfied.

31. In Hindalco Industries Ltd. Vs. Appellate authority and anr. 2004 (101) FLR 1063, the Allahabad High Court following Remington Rent of India vs. Workman 1970 SC 1421 has also inter alia held that in order to forfeit the statutory right of gratuity qualified by expression to the extent of damage or loss so caused in Action 4( 6) (b), the quantum of forfeiture has to be determined, and thus it requires an order which can only be passed after giving an opportunity to the employee.

32. It is pertinent to mention here that in the present case no notice was served upon the workman before forfeiture of the gratuity. Similarly, the loss caused to the petitioner/management is also unquantified. Signing Further, the principles of natural justice have to be followed and complied with in every proceeding. Non-compliance with the principles of natural justice results in enormous prejudice.

33. Thus, in absence of compliance with principles of natural justice, the decision of the petitioner management of forfeiture of gratuity cannot be sustained in the eyes of law.

34. In view of the discussion hereinabove, the present writ petition is disposed of with the following directions:

(i) The petitioner management shall quantify the loss caused to the petitioner/company for non-vacation of the government accommodation,

(ii) The petitioner/company shall afford an opportunity of hearing to the respondent/workman before taking the decision of forfeiture of gratuity in accordance with the law.

(iii) Any order passed thereafter shall certainly be subject to the review by the Controlling Authority and the Appellate Authority as provided under the law.

(iv) The orders under challenge i.e. order dated 12.02.2020 passed by the Controlling Authority and the order dated 28.09.2021 passed by the Appellate Authority are set aside.

35. With the above directions, the petition along with the pending application stands disposed of.

DINESH KUMAR SHARMA, J NOVEMBER 22, 2022 Signing