Calcutta High Court (Appellete Side)
Steel Authority Of India Ltd vs The Ld. Controlling Authority & Anr on 14 January, 2025
Author: Ravi Krishan Kapur
Bench: Ravi Krishan Kapur
IN THE HIGH COURT AT CALCUTTA
CONSTITUTIONAL WRIT JURISDICTION
APPELLATE SIDE
W.P.A. 26418 of 2017
Steel Authority of India Ltd.
Versus
The Ld. Controlling Authority & Anr.
For the petitioner : Mr. Lakshmi Kumar Gupta,
Mr. Narayan Ch. Bhattacharya,
Mr. Lakshmi Kanta Pal,
Mr. Bandhu Brata Bhula,
For the respondent no.2 : Mr. Arnab Ray,
For the State : Mr. Naba Kumar Das,
Mr. Subrata Das,
Judgment on : 14 January 2025
Ravi Krishan Kapur J.
1. The petitioner employer assails an order dated 11 January, 2017
directing payment of an amount of Rs.14,85,448/- as gratuity under
section 4 of the Payment of Gratuity Act 1972 alongwith the notice dated
11 January 2017 in Form R and the consequential show cause notice
dated 18 May 2017 passed in Case No pg/10/2015/ALCR (SAIL, ASP vs
Smt Swasti Ghosh). The petitioner also prays for directions on the
respondent no.2 to vacate and surrender the residential accommodation
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provided by the petitioner which continues to be unauthorisedly
occupied by the respondent no.2.
2. Briefly, the husband of the respondent no.2, Mohan Kumar Ghosh was
an employee of the Alloy Steel Plant a unit of Steel Authority of India
Limited (SAIL) and retired on 31 December, 2014. During the course of
his employment, he was allotted premises No.6, Sarat Chandra Avenue,
Durgapur Steel Township for his residential accomodation which he was
obliged to vacate within two months of his retirement.
3. Shortly after his retirement in January 2015, the said Mohan Kumar
Ghosh was paid his outstanding dues on account of provident fund
alongwith interest aggregating to Rs.23,46,147/- and Rs.21,557/-
respectively. Subsequently, in March 2015 he claimed gratuity before the
Controlling Authority without vacating the above quarters.
4. Significantly, sometime in April 2015, Mohan Kumar Ghosh had
requested the Competent Authority for a lease or license in respect of the
above residential quarters. The request was considered and rejected
informing him that such retention could only be permitted for two
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months with an additional period of two months on special grounds and
at an enhanced rent.
5. In January, 2017, the Controlling Authority disposed of an application
filed by the respondent no.2 and passed the impugned order directing
the petitioner to pay gratuity amounting to Rs.14,85,448/-. Thereafter,
the Controlling Authority issued a notice for issuance of the impugned
certificate for recovery of the gratuity amount alongwith compound
interest. The principal grievance of the petitioner is that the impugned
order was passed in violation of the principles of natural justice and
without any notice to the petitioner. In any event, there are no reasons in
the impugned order which makes the same unsustainable.
6. It is contended that the petitioner is an “integral company” under the
Public Sector Iron and Steel Companies (Restructuring) and
Miscellaneous Provisions Act, 1978 and has its own Gratuity Fund under
section 20 of the Act which provides for higher benefits than what is
payable under the Act in respect of non-executive employees. It is further
alleged that in 2014, when Mohan Kumar Ghosh had retired, the ceiling
limit under the SAIL Gratuity Rules was Rs. 10,00,000/-. However, the
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respondent no.2 has been awarded Rs.14,85,448/- which is more than
the amount prescribed. It is urged that clause 3.2.1 (c) of SAIL Gratuity
Rules also recognizes withholding of such gratuity for non-compliance of
the Company Rules including failing to vacate the company
accommodation, and that no interest is payable on such gratuity amount
for the period of unauthorized occupation. The Rules have also been
promulgated in order to safeguard the petitioner against the exploitation
by an ex-employee or his family members post his death. Since the rent,
electricity and water charges are being borne by the petitioner and the
same continue to accumulate there is no way of securing such amount.
7. It is also contended that the normal monthly rent for the above
accommodation at the relevant point of time was Rs. 3,697/-. As such,
an amount of Rs. 4.13 lacs has accrued only on account of occupational
charges from the respondent no.2. There are also outstanding additional
dues on account of penal charges which continue to accumulate with
little hope of recovery. Only electricity bills raised at a nominal flat rate
till 2021 have been paid by the respondent no.2. However, recovery of
such amount is subject to the final bill as per the actual meter reading at
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the time of surrender which is also conditional. It is further alleged that
no notice of the application dated 21 July 2016 was served on the
petitioner before passing of the impugned order. As such, the impugned
order dated 11 January 2017 passed by the Controlling Authority is in
violation of the principles of natural justice.
8. On behalf of the respondent, it is contended that the writ is not
maintainable since the petitioner has failed to avail of the statutory
alternative remedy of appeal provided under section 7(7) of the Act. The
husband of the respondent no.2 became entitled to gratuity under
section 4(1) of the Act upon completing continuous service of 36 years 1
month and 11 days. His services were never terminated. In any event,
there is no provision for forfeiture of gratuity. It is further contended that
the SAIL Gratuity Rules have no statutory force and are inapplicable. In
any event, the retention of quarters is no reason to withhold any amount
on account of gratuity of an ex-employee. Moreover, in view of the clear
mandate of section 14 of the Act, the provisions of the Act have an
overriding effect over the SAIL Gratuity Rules. In support of such
contentions, the respondent relies on Wazir Chand vs Union of India and
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Ors, (2001) 6SCC 596 and Gorakhpur University vs Dr Shitla Prasad
Nagendra (2001) 6 SCC 591.
9. Admittedly, the impugned order has been passed on an application
which had not been served on the petitioner and no notice of the same
had been given to the petitioner. Moreover, there are no reasons in the
impugned order. In passing the impugned order, the Controlling
Authority was bound to give reasons. In the absence of any reason, the
impugned order is unsustainable. Reasons discuss how the mind has
been applied to the matters in issue and conveys the nexus between the
matters which have been considered and the conclusion based thereon.
[UPSC vs. Bibhu Prasad (2021) 4 SCC 516.
10. There is also no merit in the contention that the petitioner has an
alternative remedy under section 7(7) of the Act. The impugned order has
been passed in violation of principles of natural justice and without any
reasons. It is well settled that the existence of an alternative remedy is
not an absolute bar to the maintainability of a writ petition under Article
226 of the Constitution. A writ petition can always be entertained where
there is (i) a breach of fundamental rights; (ii) a violation of the principles
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of natural justice; (iii) a jurisdictional error; or (iv) a challenge to the vires
of the statute or delegated legislation (Commissioner of State Tax v.
Commercial Steel Ltd., (2022) 16 SCC 447).
11. Insofar as the grievance of the petitioner pertaining to the respondent
no.2 wrongfully and unauthorisedly withholding the property belonging
to the petitioner is concerned, there is a clear statutory alternative
remedy provided in section 630 of the Companies Act, 1956 (now section
452 of the Companies Act, 2013). Section 452 of the Companies Act 2013
inter alia provides as follows:
452. Punishment for wrongful withholding of property – (1) If any officer or
employee of a company–
(a) wrongfully obtains possession of any property, including cash of the company;
or
(b) having any such property including cash in his possession, wrongfully
withholds it or knowingly applies it for the purposes other than those expressed or
directed in the articles and authorised by this Act,
he shall, on the complaint of the company or of any member or creditor or
contributory thereof, be punishable with fine which shall not be less than one lakh
rupees but which may extend to five lakh rupees.
(2) The Court trying an offence under sub-section (1) may also order such officer or
employee to deliver up or refund, within a time to be fixed by it, any such property
or cash wrongfully obtained or wrongfully withheld or knowingly misapplied, the
benefits that have been derived from such property or cash or in default, to
undergo imprisonment for a term which may extend to two years.
[Provided that the imprisonment of such officer or employee, as the case may be,
shall not be ordered for wrongful possession or withholding of a dwelling unit, if
the court is satisfied that the company has not paid to that officer or employee, as
the case may be, any amount relating to–
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(a) provident fund, pension fund, gratuity fund or any other fund for the welfare of
its officers or employees, maintained by the company;
(b) compensation or liability for compensation under the Workmen’s Compensation
Act, 1923 (19 of 1923) in respect of death or disablement.]
12. On a plain reading of the above section, there is a speedy and summary
procedure provided for retrieving the property of a company where it has
been wrongfully retained by an officer of the company after termination
of his employment. In Lalita Jalan vs. Bombay Gas Company Limited
(2003) 6 SCC 107 it has been held as follows:
22. The view expressed in J.K. (Bombay) Ltd. [(2001) 2 SCC 700 : 2001 SCC (Cri)
393] runs counter to the view expressed in Abhilash Vinodkumar Jain [(1995) 3
SCC 732 : 1995 SCC (Cri) 590] wherein it has been clearly held that the object of
Section 630 of the Act is to retrieve the property of the company where wrongful
holding of the property is done by an employee, present or past, or heirs of the
deceased employee or officer or anyone claiming the occupancy through such
employee or officer. The view expressed in Abhilash Vinodkumar Jain [(1995) 3
SCC 732 : 1995 SCC (Cri) 590] clearly subserves the object of the Act which is to
the effect of recovering the possession of the property belonging to the company. If
it is held that other members of the family of the employee or officer or any person
not connected with the family who came into possession through such employee
would not be covered by Section 630 of the Act, such a view will defeat the quick
and expeditious remedy provided therein. The basic objection to this view is that
the aforesaid provision contained in Section 630 of the Act is penal in nature and
must be strictly construed and therefore the actual words used should not be
given any expansive meaning. A provision of this nature is for the purpose of
recovery of the property and if, in spite of demand or subsequent order of the
court, the possession of the property is not returned to the company, the question
of imposing penalty will arise. Similar provisions are available even under the
Code of Civil Procedure. In execution of a decree for recovery of money or
enforcement of an injunction, the judgment-debtor can be committed to a prison.
Such a provision by itself will not convert the civil proceeding into a criminal one.
Even assuming that the said provision is criminal in nature, the penalty will be
attracted in the event of not complying with the demand of the recovery of the
possession or pursuant to an order made thereof. The possession of the property
by an employee or anyone claiming through him of such property is unlawful and
recovery of the same on the pain of being committed to a prison or payment of fine
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cannot be stated to be unreasonable or irrational or unfair so as to attract the
rigour of Article 21 of the Constitution. If the object of the provision of Section 630
of the Act is borne in mind, the expansive meaning given to the expression
“employee or anyone claiming through him” will not be unrelated to the object of
the provision nor is it so far fetched as to become unconstitutional. Therefore, with
profound respects the view expressed in J.K. (Bombay) Ltd. [(2001) 2 SCC 700 :
2001 SCC (Cri) 393] in our opinion is not correct and the view expressed
in Abhilash Vinod Kumar Jain [(1995) 3 SCC 732 : 1995 SCC (Cri) 590] is justified
and should be accepted in interpreting the provision of Section 630 of the Act.
13. In view of the above, the petitioner has an available statutory remedy
under section 452 of the Companies Act, 2013 and there are no reasons
as to why the petitioner company has chosen not to avail the same. To
this extent, the petitioner company has only itself to blame for not taking
any timely action against such delinquent ex-employees and their family
members. This also demonstrates a lack of bonafides of the petitioner
company in protecting public premises and for recovery of their
legitimate dues from their ex-employees.
14. During the hearing of this writ petition, by an order dated September 5,
2024 the petitioner was directed to deposit the entire sum of
Rs.14,85,448/- claimed as gratuity with the Registrar General, High
Court on the assurance that upon such deposit being made, the
respondent no.2 would handover immediate physical possession of the
above company quarters. Pursuant to the order dated September 5,
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2024, the petitioner had deposited the above amount. Thereafter, on 18
September 2024 the respondent no.2 had expressed an intention not to
handover the company quarters. In view of the unfair stand of the
respondent no.2, there is no purpose in the above amount being left lying
deposited in Court. In view of the above, the petitioner company is
permitted to forthwith withdraw the said amount of Rs. 14,85,448/-
alongwith any accrued interest forthwith. For such purposes, the
Registrar General, High Court is directed to encash the fixed deposit
lying in terms of the order dated September 5, 2024.
15. In view of the above, the impugned order is unsustainable and is set
aside. All consequential steps taken pursuant to the impugned order
including issuance of the showcase notice dated 18 May 2017 are also
set aside and quashed. There shall be a direction on the Controlling
Authority to reconsider the matter afresh after giving a right of hearing to
both the petitioner and the respondent no.2. It is made clear that the
above exercise should be completed within a period of four weeks from
date. Insofar as the grievance of the petitioner against the respondent
no.2 for illegal retention of the company’s property is concerned, the
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petitioner is directed to take necessary and expeditious steps in
accordance with law including availing of the statutory remedy under
section 452 of the Companies Act 2013. With the above directions and to
the above extent only, W.P.A No 26418 of 2017 stands allowed.
(Ravi Krishan Kapur, J.)
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