Silence as Approval: High Court Upholds Worker’s Right to Leave Encashment Following Administrative Procrastination

In a significant ruling for labour rights, the High Court of Gujarat at Ahmedabad has affirmed that public sector employees cannot be deprived of terminal benefits due to administrative inaction. The court dismissed a petition filed by the Ahmedabad Municipal Corporation, which sought to challenge a Labour Court award directing the payment of leave encashment to a former junior clerk whose resignation had lingered in bureaucratic limbo for months.

A Case of Bureaucratic Delays

The dispute originated from the employment history of Sadgunbhai Semulbhai Solanki, who served the Ahmedabad Municipal Corporation for several decades. In March 2013, the respondent submitted his voluntary resignation, citing physical inability and familial responsibilities. Despite his clear intent to retire, the Corporation failed to process or respond to the application for seven months.

The petitioner argued that because the respondent failed to deposit the mandatory one-month notice pay, his resignation was never formally accepted. Consequently, the Corporation maintained that he remained in service, albeit absent, until he reached the age of superannuation in 2014, thereby disqualifying him from the specific leave encashment benefits he sought.

The Legal Tug-of-War

The core of the legal challenge rested on whether the Labour Court had the jurisdiction under Section 33(c)(2) of the Industrial Disputes Act to adjudicate this claim. The Corporation argued that since there was no recognized pre-existing right to the funds, the Labour Court overstepped its authority.

Conversely, the respondent argued that under the relevant service regulations, the Corporation’s failure to respond to his resignation request for 90 days resulted in a "deemed retirement." He pointed to a certificate issued by the Corporation itself, which confirmed over 299 days of leave to his credit, representing a pre-existing right that was not subject to dispute.

Judicial Reasoning: Property Rights and Accountability

Justice M. K. Thakker, presiding over the matter, underscored the principle that earned leave is a form of salary and, effectively, property. The court noted that administrative silence cannot be used to penalize an employee who has followed the proper procedure for retirement.

“Leave encashment is akin to salary which is property, and depriving a person of his property without valid statutory provision is [a] violation of the provision of the Constitution of India,” the court observed. The ruling highlighted that the Corporation’s demand for notice pay was misplaced, as the respondent had explicitly expressed his willingness to pay it in his initial application, pending the acceptance of his resignation.

Key Observations

• On the nature of leave: "Leave encashment is akin to salary which is property and depriving a person of his property without valid statutory provision is violation of the provision of Constitution of India."
• On institutional obligations: "As the certificate... is not disputed by the petitioner Corporation it cannot be said that there is no pre-existing right."
• On the effect of silence: "As per the service regulation, within a period of 90 days, the communication has to be sent to the respondent with regard to the acceptance or rejection... however, for seven months there was no intimation."

The Final Verdict

The High Court dismissed the petition, confirming the Labour Court's order for payment. This decision serves as a stern reminder to public sector employers that they cannot remain silent on retirement applications and subsequently use their own inaction as a justification to deny earned terminal benefits to retiring workmen. For employees, it reinforces the protection of their accrued benefits as a constitutional right, regardless of administrative hurdles.