TMI Blog2008 (1) TMI 942X X X X Extracts X X X X X X X X Extracts X X X X ..... egularity, gross negligence and carelessness by the respondent. The respondent was, therefore, called upon to submit explanation within three days why disciplinary action should not be taken against him. On January 15, 2000, the respondent submitted his reply denying the allegations and contending that he had not committed any illegality and there was no justification to ask for his explanation. The Corporation was not satisfied with the reply filed by the respondent and decided to hold departmental inquiry against him. On January 31, 2000, therefore, show cause notice was issued to the respondent for the losses caused to the Corporation due to negligence and carelessness on the part of the respondent. It may be noted at this stage that the respondent retired on attaining the age of superannuation (60 years) on the same day, i.e. January 31, 2000. According to the respondent, since he retired from service on January 31, 2000, no proceedings could have been initiated against him and issuance of show cause notice which was received by him after office hours at 6.45 p.m. on January 31, 2000 was illegal as there was no relationship of employer and employee between the Corporation and h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... writ petitioner retired asking for an explanation as to why proceedings should not be initiated against him. It was further submitted that even charge-sheet was issued on January 31, 2000 and it was within power of the Corporation to issue such charge-sheet and the High Court ought not to have set aside the inquiry proceedings and consequential orders. It was urged that it is settled law that relationship of employer and employee continues to remain so long as all retiral benefits have not been paid to the employee. Since the amount of gratuity, leave encashment and other pensionary benefits were yet to be paid to the employee, the tie continued and proceedings initiated against the writ petitioner were in accordance with law and should not have been interfered with. That apart, under the U.P. State Sugar Corporation Ltd. General Service Rules, 1988 (hereinafter called the Rules ), such proceedings could have been initiated even after an employee has retired since they related to the recovery of losses caused to the Corporation by the respondent-employee. Since the present proceedings were for recovery of loss caused to the Corporation, such an action could have been taken under th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... p. [= of ₹ 1,46,471.00] was ordered to be adjusted against the amount of gratuity and encashment of earned leave which was also the financial loss suffered by the Corporation as a result of negligence of the respondent. It is in the light of the above facts that we have to consider whether such an action could have been taken against the respondent-employee by the appellant-Corporation. 10. The learned counsel for the appellant is right when he submitted that show cause notice was issued to the respondent-employee on January 13, 2000 when he was very much in service. The respondent submitted his explanation on January 15, 2000 which was not found to be satisfactory. A regular show cause notice was, therefore, issued by the Corporation on January 31, 2000 and was served upon the respondent-employee on the same day. The notice was also sent by registered post which was received by the employee on February 11, 2000. But it is clear from the documents that show cause notice was issued and replied. A regular show cause notice as to departmental inquiry was also served upon the respondent- employee on the last day of his service which was January 31, 2000. In our opinion, there ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... where the service of an employee is terminated for misconduct gratuity should not be paid to him. It appears that in award which framed gratuity schemes sometimes simple misconduct is distinguished from gross misconduct and a penalty of forfeiture of gratuity benefit is denied in the latter case but not in the former, but latterly industrial tribunals appear generally to have adopted the rule which is contained in clause (ii)(b) of the present scheme. If the misconduct for which the service of an employee is terminated has caused financial loss to the works, then before gratuity could be paid to the employee he is called upon to compensate the employer for the whole of the financial loss caused by his misconduct, and after this compensation is paid to the employer if any balance from the gratuity climbable by the employee remains that is paid to him. . (emphasis supplied) 14. In Calcutta Insurance Co. Ltd. v. Workmen, (1967) 2 SCR 596, this Court considered the concept of gratuity. It referred to Garment Cleaning Works and other cases. It noted that the opinion expressed in those cases was that gratuity was earned by an employee for long and meritorious service and consequently ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er approached this Court. His contention was that an amount of gratuity could not have been withheld. 18. Negativing the contention, this Court held that the power to withhold gratuity was conferred on the President and such action could not be said to be illegal. It was ruled that the Government could adjust its dues against the amount of death-cum-retirement gratuity otherwise payable to Government servant. 19. In State of Uttar Pradesh v. Brahm Datt Sharma Anr., (1987) 2 SCC 179 : JT 1987 (1) SC 571, this Court held that it was open to Government to reduce, forfeit, withhold or recover pension, after affording hearing to the affected person, on ground of unsatisfactory service based on proved findings of serious misconduct or causing pecuniary loss to the Government. Such proceedings can be initiated even after retirement for misconduct, negligence or financial irregularity. Where Government servant was found guilty of misconduct or negligence resulting in financial loss to the Government, it was competent to the Government to direct reduction in pension. 20. Interpreting Article 470 of U.P. Civil Service Regulations, this Court observed that the said provision stated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... spondent-employee on January 13, 2000, but even regular show cause notice was issued on January 31, 2000 and hence the proceedings could have been continued on the basis of law laid down in Jankiraman. 24. In UCO Bank Ors. v. Sanwar Mal, (2004) 4 SCC 412 JT 2004 Supp 2 SC 487, the Court held that two concepts; (i) resignation; and (ii) retirement were different and employed for different purposes and in different contexts. Resignation brings about complete cessation of master and servant relationship, but retirement does not do so. In case of retirement, master and servant relationship continues for grant of retiral benefits. 25. If it is so, the appellant- Corporation, in our opinion, is right in submitting that the proceedings could have been continued after the retirement of the respondent-employee as far as the financial loss caused to the Corporation because of negligence on the part of employee and the benefit claimed by the respondent-workman on his terminal benefits. 26. Strong reliance was placed by the learned counsel for the respondent on P.V. Mahadevan v. MD. T.N. Housing Board, (2005) 6 SCC 636 : JT 2005 (7) SC 417. In that case, there was inordinate dela ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... LTIES (i) Censure (ii) With-holding of annual increment(s), including stoppage of an efficiency bar/assessment stage with or without cumulative effect. (iii) Recovery from pay or from such other amounts as may be due to the employee of the whole or part of any pecuniary loss caused to the Corporation by negligence or breach of orders on his part; B. MAJOR PANALTIES (iv) reduction to a lower grade or post or to a lower stage in a time scale; (v) removal from service which does not disqualify from future employment, (vi) dismissal from service which ordinarily disqualifies from future employment. (emphasis supplied) 30. Rule 102 prescribes procedure before starting enquiry. Rule 103 provides for major penalties. Rule 109 lays down procedure for imposition of minor penalties and is another important provision which may be quoted in extenso. 109. (1) Whenever the punishing authority is satisfied that good and sufficient reasons exist for adopting such a course it may impose the penalty of (i) Censure, or (ii) Stoppage at an efficiency bar. Provided that it shall not be necessary to frame formal charges against the employee concerned but his e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to in Article 226 of the Constitution are obviously intended to enable the High Court to issue them in grave cases where the subordinate tribunals or bodies or officers act wholly without jurisdiction, or in excess of it, or in violation of the principles of natural justice, or refuse to exercise jurisdiction vested in them, or there is an error apparent on the face of the record, and such act, omission, error, or excess has resulted in manifest injustice. 34. Again, in leading case of Sangram Singh v. Election Tribunal, Kotah, (1955) 2 SCR 1, dealing with the ambit and scope of powers of High Courts under Article 226 of the Constitution, Bose, J. stated; That, however, is not to say that the jurisdiction will be exercised whenever there is an error of law. The High Courts do not, and should not, act as courts of appeal under Article 226. Their powers are purely discretionary and though no limits can be placed upon that discretion it must be exercised along recognized lines and not arbitrarily; and one of the limitations imposed by the courts on themselves is that they will not exercise jurisdiction in this class of case unless substantial injustice has ensued, or is likely to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssession of that quarter was restored to him taking into account the fact that he had retired and now he will have to vacate the quarter allotted to him by the Commission. In spite of that, he continued to occupy the quarter ignoring the warning by the Commission that if he would not vacate latest by June 30, 1990, penal rent would be charged from him. In our judgment, considering all these facts, the High Court was wholly unjustified in exercising extraordinary and equitable jurisdiction in favour of the petitioner respondent herein and on that ground also, the order passed by the High Court deserves to be set aside . (emphasis supplied) 37. Considering the facts and circumstances in their entirety, in our considered opinion, the High Court was wrong in holding that the proceedings were initiated after the respondent retired and there was no power, authority or jurisdiction with the Corporation to take any action against the writ-petitioner and in setting aside the orders passed against him. In our judgment, proceedings could have been taken for the recovery of financial loss suffered by the Corporation due to negligence and carelessness attributable to the respondent-employee. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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