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IN THE HIGH COURT OF MADRAS
S. Vaidyanathan, J.
The Area Manager, Food Corporation of India and Ors. - Appellants
Vs.
S. Sundaram and Ors. - Respondent
W.P. No. 37816 of 2015
Decided On : 27-08-2019
For the Appellant : M. Imthias
For the Respondents: Balan Haridoss and A.K. Manoj Kumar
The employer has the right to recover losses from the employee, and 'compulsory retirement' can be imposed as a punishment, justifying the forfeiture of gratuity.
Headnote:
Gratuity Forfeiture - Employment Dispute - FCI (Staff) Regulations, 1971, Payment of Gratuity Act, 1972 - The court discussed the provisions of FCI (Staff) Regulations, 1971 and Payment of Gratuity Act, 1972. It interpreted the term 'compulsory retirement' and its relation to gratuity forfeiture. The court highlighted the employer's right to recover losses and the employee's entitlement to gratuity. The judgment quashed the order confirming the payment of remaining gratuity to the employee.
Fact of the Case:
The Food Corporation of India (Management) challenged the order of the Appellate Authority confirming the payment of remaining gratuity to the employee. The Management imposed a penalty of Compulsory Retirement along with forfeiture of 50% of gratuity due to the employee for causing a loss of Rs. 91,96,140. The employee filed a Gratuity Application before the Controlling Authority under the Payment of Gratuity Act, 1972.
Finding of the Court:
The court held that the employer has the right to recover losses from the employee and that 'compulsory retirement' can be imposed as a punishment, justifying the forfeiture of gratuity. It quashed the order confirming the payment of remaining gratuity to the employee.
Issues: The issues involved the interpretation of 'compulsory retirement' and its relation to gratuity forfeiture, the employer's right to recover losses, and the employee's entitlement to gratuity.
Ratio Decidendi: The court interpreted the provisions of FCI (Staff) Regulations, 1971 and Payment of Gratuity Act, 1972, emphasizing the employer's right to recover losses and the employee's entitlement to gratuity. It held that 'compulsory retirement' can be imposed as a punishment, justifying the forfeiture of gratuity.
Final Decision: The judgment quashed the order confirming the payment of remaining gratuity to the employee and directed the refund of the deposited amount to the Management.
ORDER :
S. Vaidyanathan, J.
1. Food Corporation of India has come up with the present Writ Petition challenging the order dated 04.11.2015 passed by the 2nd Respondent in Gratuity Appeal No. 113 of 2015, confirming the order dated 17.12.2014 passed by the 3rd Respondent in G.A. No. 56 of 2014.
2. According to the Food Corporation of India (hereinafter referred to as 'Management'), the 1st Respondent was employed in their Management and retired as Assistant General Manager (Quality Control). The Management initiated Disciplinary Proceedings against the 1st Respondent and issued Charge Sheet under Regulation 58 of Food Corporation of India (Staff) Regulations, 1971 and the same was served on him on 28.06.2013. Charges framed against the 1st Respondent/employee is that while he was working as Area Manager, Food Corporation of India, Cuddalore, a random physical verification of the food grains was conducted at T.V. Koil Depot by a squad from Head Quarters, New Delhi from 10.06.2013 to 12.06.2013 and it was found that there was shortage of bags containing food grains valued to the tune of Rs. 91,96,140/-.
3. Consequent to the same, the 1st Respondent/employee was called upon to submit his explanation to the Charge Memo on the charges framed against him and he submitted his explanation. As the explanation was not satisfactory, an inquiry was held in terms of the FCI (Staff) Regulations, 1971 and the Inquiry Officer submitted his Report holding that the charges framed against the 1st Respondent/employee are proved on account of ineffective supervision over depot personnel and its operations, leading to misappropriation and thereby becoming responsible for causing huge loss to the Management to the tune of the said amount.
4. The Inquiry Report was served on the 1st Respondent/employee on 06.06.2014 for his comments and he submitted his explanation on the inquiry findings on 09.06.2014. The 1st Respondent/employee agreed with the findings of the Inquiry Officer with regard to the nomination of physically challenged for conducting physical verification and that the physical verification of Headquarters team was also not disputed. However, the 1st Respondent/employee denied that there was no shortage of bags containing food grains.
5. The Disciplinary Authority, on perusing the findings of the Inquiry Officer and the explanation of the 1st Respondent/employee, found that the 1st Respondent/employee failed to have effective supervision and control over the depot operation under his jurisdiction and to ensure maintenance of bags of each stack as per entries in the record. In view of the same, the Disciplinary Authority, vide order dated 24.06.2014, held that the 1st Respondent/employee is guilty of charges and imposed penalty of Compulsory Retirement along with forfeiture of 50% of gratuity payable to the 1st Respondent/employee.
6. Pursuant to the said order of the Disciplinary Authority, the Management forfeited a sum of Rs. 5,00,000/-, being the 50% of the gratuity amount due to the 1st Respondent/employee and paid the balance Gratuity amount of Rs. 5,00,000/- to him on 07.08.2014.
7. Aggrieved by the deprivation of 50% gratuity, the 1st Respondent/employee preferred Gratuity Application No. 56/2014 before the Controlling Authority under the Payment of Gratuity Act, 1972, i.e. the Assistant Labour Commissioner (Central), Puducherry, the 3rd Respondent herein. The Controlling Authority, after hearing both sides, ultimately allowed the Application vide order dated 17.12.2014 and held that the 1st Respondent/employee is entitled to payment of Rs. 5,00,000/- towards gratuity as per the provisions of the Act and interest thereon at 10% per annum on the said gratuity, besides the payment made to him for the period from 01.08.2013 to 07.08.2014 till the date of the order.
8. Challenging the said order, the Management preferred Gratuity Appeal No. 113 of 2015 before the Appellate Authority under the Payment of Gratuity Act, i.e. the Deputy Chief Labour
