2005 Supreme(SC) 678

2005(4) Supreme 616
Supreme Court of India
(From Bombay High Court)
Mrs. Ruma Pal & C.K. Thakker, JJ.
Secretary, O.N.G.C. Ltd. & Anr. —Appellants
versus
V.U. Warrier —Respondent
Civil Appeal Nos. 2766-2767 of 2005
(Arising out of SLP (C) Nos. 6825-6826 of 2004)
Decided on 20-4-2005
Counsel for the Parties :
For the Appellants : B. Datta, Additional Solicitor General, S. Bor­thakur and Sunil Kumar Jain, Advocates.
For the Respondent : Ashwani Kumar, Advocate.

Important point
The Oil and Natural Gas Commission was empowered to withhold gratuity by deducting the amount which is found due to the Commission and payable by the retired employee towards penal charges for unauthorized occupation to the quarter allotted to him by the Commission.

Headnote:Oil and Natural Gas Commission Act, 1959—Section 32—Oil and Natural Gas Commission (Death, Retirement and Terminal Gratuity) Regulations, 1969—Regulation 5—Payment of Gratuity Act—Section 2(e)—Gratuity—Deduction of an amount of Rs. 53,632/- towards unau­thorized occupation charges of official accommodation—Respondent’s case that it was not open to the Commission to deduct any amount payable to him towards gratuity—Respondent was in service of Oil & Natural Gas Commission, holding the post of Additional Director prior to his retirement—As an employee of the Commission, he was allotted a quarter—He retired from service on reaching the age of superannuation w.e.f. 28.2.1990—Respondent was asked to handover vacant and peaceful possession of the quarter to the Commission latest by 30.6.1990—Respondent did not vacate the quarter—Eviction proceedings were initiated against him—Respondent vacated the quarter on 16.5.1991—Respondent claimed an amount of gratuity payable to him—Whether action of the Commission in deducting an amount towards unauthorised occupation charges was arbitrary, unlawful or unreasona­ble—(No)—High Court was not justified in holding that amount of pensionary benefits could not be set off against the dues for unauthorized occupation.

       Held : It is no doubt true that pensionary benefits, such as gratuity, cannot be said to be ‘bounty’. Ordinarily, therefore, payment of benefit of gratuity cannot be withheld by an employer. In the instant case, however, it is the specific case of the Commission that the Commission is having a statutory status. In exer­cise of statutory powers under Section 32(1) of the Act, regulations known as the Oil and Natural Gas Commission (Death, Retirement and Terminal Gratuity) Regulations, 1969 have been framed by the Commis­sion. In Sukhdev Singh vs. Bhagatram Sardar Singh Raghuvanshi & Anoth­er, (1975) 1 SCC 421 the Constitution Bench of this Court held that regulations framed by the Commission under Section 32 of the Oil and Natural Gas Commission Act 1959 are statutory in nature and they are enforceable in a court of law. They provide for eligibility of grant of gratuity, extent of gratuity, etc. (Para 17)

       The above regulation leaves no room of doubt that the Commission has right to effect recovery of its dues from any officer without his consent from gratuity. In the present case admittedly the respondent retired after office hours of February 28, 1990. According to the Commission, he could be allowed four months’ time to occupy the quar­ter which was granted to him. His prayer for extension was considered and rejected stating that it would not be possible for the Commission to accept the prayer in view of several officers waiting for quarters. He was also informed that if he would not vacate the quarter, penal rent as per the policy of the Commission would be recovered from him. But the respondent did not vacate the quarter. It was only after eviction proceedings were initiated that he vacated the quarter on May 16, 1991. In the circumstances, in our opinion, it cannot be said that the action of the Commission was arbitrary, unlawful or unreasonable. It also cannot be said that the Commission had no right to withhold gratuity by deducting the amount which is found ‘due’ to Commission and payable by the respondent towards penal charges for unauthorized occupation of the quarter for the period between July 1, 1990 and May 15, 1991. (Para 19)

       It is well settled that gratuity is earned by an employee for long and meritorious service rendered by him. Gratuity is not paid to the employee gratuitously or merely as a matter of boon. It is paid to him for the service rendered by him to the employer. (Para 23)

       As the period of service must be unbroken, so must the continuity of meritorious service be a condition for entitling the workman to gratu­ity. If a workman commits such misconduct as causes financial loss to his employer, the employer would under the general law have a right of action against the employee for the loss caused and making a provision for withholding payment of gratuity where such loss caused to the employer does not seem to aid to the harmonious employment of labour­ers or workmen. The Court proceeded to state that the misconduct may be such as to undermine the discipline in the workers - a case in which it would be extremely difficult to assess the financial loss to the employer. (Para 23)

       The facts of the present case did not deserve interference by the High Court in exercise of equitable jurisdiction under Article 226 of the Constitution. The respondent-petitioner before the High Court-, was a responsible offi­cer holding the post of Additional Director (Finance & Accounts). He was, thus, “gold collar” employee of the Commission. In the capacity of employee of the Commission, he was allotted a residential quarter. He reached the age of superannuation and retired after office hours of February 28, 1990. He was, therefore, required to vacate the quarter allotted to him by the Commission. The Commission, as per its policy, granted four months’ time to vacate. He, however, failed to do so. His prayer for continuing to occupy the quarter was duly considered and rejected on relevant and germane grounds. The residential accommoda­tion constructed by him by taking loan at the concessional rate from the Commission was leased to Commission, but the possession 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. (Para 32)