IN THE HIGH COURT OF GUJARAT AT AHMEDABAD SPECIAL CIVIL APPLICATION No 8824 of 1999 For Approval and Signature: HON'BLE MR.JUSTICE K.S.JHAVERI ============================================================ 1. Whether Reporters of Local Papers may be allowed : YES to see the judgements? 2. To be referred to the Reporter or not? : YES 3. Whether Their Lordships wish to see the fair copy : NO of the judgement? 4. Whether this case involves a substantial question : NO of law as to the interpretation of the Constitution of India, 1950 of any Order made thereunder? 5. Whether it is to be circulated to the concerned : NO Magistrate/Magistrates,Judge/Judges,Tribunal/Tribunals? -------------------------------------------------------------- GUJARAT STATE FERTILISERS AND CHEMICALS LTD Versus SURENDRA T AMIN -------------------------------------------------------------- Appearance: 1. Special Civil Application No. 8824 of 1999 MR KARTIK THACKER For M/S TRIVEDI & GUPTA for Petitioner No. 1 MR NK MAJMUDAR for Respondent No. 1 -------------------------------------------------------------- CORAM : HON'BLE MR.JUSTICE K.S.JHAVERI Date of decision: 09/08/2004 ORAL JUDGEMENT 1.0. The petitioner Gujarat State Fertilizers & Chemicals Ltd., by way of this petition has challenged the order dated 6th February, 1999 in Gratuity Case no. 44/98 passed by the Controlling Authority appointed under the provisions of Payment of Gratuity Act, 1972, which was confirmed by the appellate authority vide order dated 10th September, 1999. 2.0. The short facts of the case as they emerge from the record of the petition are that the respondent at the relevant point of time was working as Manager [Agro Project] and was drawing salary of Rs.11,600=00 p.m. It is the case of petitioner that for holding the aforesaid post and position, high degree of responsibility, trust and confidence are required from the incumbent holding the office and in the present case the respondent was authorized on behalf of the petitioner to deal with its customers to enter into financial transactions as well powers to withdraw the money from and/or make payments on behalf of the petitioner. 2.1. It is the case of the petitioner that in view of the serious irregularities with regard to misusing authority and power as well as committing act of misappropriation etc., the respondent was served with order dated 17th July 1996 placing him under suspension with immediate effect. It is further the case of the petitioner that subsequently in view of the aforesaid acts, which also amounts of moral turpitude, the respondent was served with the chargesheet dated 8th August, 1996. Apart from that a criminal complaint being Criminal Complaint No. 67/96 has been filed against the respondents in the Court of Judicial Magistrate, First Class, Vadodara. 2.2. It is further the case of the petitioner that due to the aforesaid irregularities and misconduct, the petitioner lost confidence and trust in the respondent. Therefore, the petitioner withdrew the aforesaid suspension order and chargesheet and under Rule 44 of the Company's Service Rules discharged the respondent from the service vide order dated 9th April, 1997 by making payment of three months' salary in lieu of notice. 2.3. The petitioner further submitted that since the irregularities committed by the respondent was not only a serious and grave nature but also amounts to moral turpitude, more particularly at the relevant time the respondent was holding position of high responsibility, power and confidence, the petitioner was entitled to forfeit the amount towards gratuity. 2.4. The grievance of the petitioner is that though the respondent was not workmam/employee, he preferred an application being Gratuity Case No. 44/98 before the Controlling Authority, under the provisions of Payment of Gratuity Act. Before the Controlling Authority, both the parties adduced material and after appreciating the material produced before it, the Controlling authority vide order dated 6th February, 1999 allowed the application and directed the petitioner to pay an amount of Rs.2,32,000=00 alongwith the interest at the rate of 10% from 8th May, 1997 to the respondent. 2.5. Being aggrieved by the order of the Controlling Authority, the petitioner preferred an appeal being Gratuity Appeal No. 13/99 before the Appellate Authority. The Appellate Authority vide order dated 10th September, 1999 dismissed the appeal and confirmed the order dated 6th February, 1999 passed by the Controlling Authority. Hence, this petition. 3.0. Mr. Thacker learned advocate for the petitioner has submitted that in view of serious irregularities committed by the respondent, criminal complaint no.67/96 has been filed against the respondent. He further submitted that in view of the serious irregularities involving moral turpitude, under Clause (6) of Section 4 of the Payment of Gratuity Act, it is the right of the employer to forfeit the amount of gratuity and, therefore, both the authorities have committed error in allowing the application and rejecting the appeal filed by the petitioner. 3.1.1. Mr. Thacker submitted that the word used is "terminated" and if it is read with clause (1) of Section 4 of Payment of Gratuity Act, word "termination" is used in a genetic way, which includes discharge. 3.2. In view of that, Mr. Thacker has placed reliance on the dictionary meaning of the New Shorter Oxford Dictionary, which reads as under :- The New Shorter Oxford Dictionary :- Termination : The action of terminating. (1) Determination, decision, (2) The action of putting an end to something or bringing something to a close. Formerly also, the action of limiting something spatially, bounding. The cessation of the building up of a polymer molecule. Dismissal from employment. The ending of pregnancy before term by artificial means; an induced abortion. Assassination. The point or part in which anything ends. End, cessation, close, conclusion. Also, outcome, result. The final syllable, letter, or group of letters in a word; a final element affixed to a word or stem to express some relation or modification of sense; an ending, a suffix. A limit, bound; an end, an extremity. Terminate : Determine; state definitely. Also, express in words. Direct to something as object or end. Bring to an end, put an end to, cause to cease; finish, end. Come at the end of, form the conclusion of. End before term by artificial means. Dismiss from employment. Assassinate. Limit, restrict, confine to or in. Bound or limit spatially; form the physical end or extremity of. Discharge : The act of freeing from obligation, liability, or restraint; exoneration from accusation or blame; release from a responsibility or position, or from service; release from custody; dismissal from office or employment. Something that frees from obligation; a certificate of this; a receipt. The act of freeing from or removing a load; unloading; removal. The act of firing a weapon or missile, letting fly an arrow, etc. Fulfillment. execution. The act of settling a monetary liability; payment. The act of sending or pouring out; ejection; emission. That which is emitted, from a wound etc. The release of a quantity of electricity from a charged object; a flow of electricity through the air or other gas, esp. when accompanied by luminosity. The place where a river enters the sea or a lake. Formerly, the act of sending away. Now only in Law, dismissal or reversal of a court order. The relieving of some part of weight or pressure; a structure for effecting this. The process of removing the colour from a fabric; a mixture used for this. With the person or thing relieved as; Relieve of; exonerate; release from; relieve of residual obligation by fulfilling it. Unload; relieve of a load; disburden. Ride, deprive. Now rare. Disburden by speech. Eject a projectile from, fire. Release an electric charge. Command not to do something; prohibit, forbid. Relieve of a responsibility or position; release from service; dismiss from office or employment. Clear of a charge or accusation; acquit. Dismiss; release from custody. Send away; let go. Relieve of pressure by distributing it over adjacent parts. Dismissal : The action or an act of dismissing esp. from employment, one's presence, or one's thoughts. 3.1.2. In the decision of the Apex Court in the case of Sheikh Gulfan v. Sanat Kumar reported in A.I.R. 1965 S.C. p.1839, wherein in the Apex Court has held as under :- "19. The words used in S. 30(c) of the Act are, in a sense, simple enough, but it must be conceded that the problem of their construction is not very easy, and so, we might attempt to resolve this problem by considering what out approach should be in constructing the relevant provision. Normally, the words used in a statute have to be construed in their ordinary meaning, but in many cases, judicial approach finds that the simple device of adopting the ordinary meaning of words does not meet the ends of a fair and a reasonable construction. Exclusive reliance on the bare dictionary meaning of words may not necessarily assist a proper construction of the statutory provision in which the words occur. Often enough, in interpreting a statutory provision, it becomes necessary to have regard to the subject-matter of the statute and the object which it is intended to achieve. That is why in deciding the true scope and effect of the relevant words in any statutory provision, the context in which the provision is included and the policy underlying the statute assume relevance and become material. As Balsbury has observed, the words "should be construed in the light of their context rather than what may be either their strict etymological sense or their popular meaning apart from that context". This position is not disputed before us by either party." 3.1.3. Mr. Thacker has further placed reliance on the decision of the Calcutta High Court in the case of Brojo Gopal Sarkar v. Commissioner of Police & Anr., reported in A.I.R. 1955 Calcutta, p.556, wherein it has been held as under :- "11. A removal or dismissal from the office of a Special Constable may have the effect of casting a slur on the character of the officer concerned or may affect him materially in respect of any other office which he may be holding under the Government or any other employer. It is, therefore, only reasonable and proper that he should have an opportunity of showing cause against the action proposed to be taken against him. Now what sort of opportunity is to be given to a civil servant is clear from the decision of the Privy Council in High Commissioner for India v. I.M. Lall A.I.R. 1948 PC 121 (E) which has been approved of and followed by the Supreme Court of India in the case of P. Joseph John v. State of Travancore - Cochin, (S) A.I.R. 1955 S.C. 160 (F). It is not disputed by the learned advocate for the respondents that no such opportunity was given to the petitioner in the present case. 12. It has been held that the word "discharge" has the same connotation as "removal" and should be construed so as to be included within the term "dismissal" - Ramesh Chandra v. State of West Bengal, A.I.R. 1953 Cal. 188 (G). It is conceded that the petitioner has been discharged by an Authority subordinate to that by which he was appointed. This was clearly contrary to the provisions of Article 311 (1) of the Constitution. In my view this petition must succeed. The Rule is accordingly made absolute and the orders dated 30-7-1952 and 18-8-1952 are quashed. In the circumstances of this case, I direct that each party will bear its own costs of this application." 3.1.4. Mr. Thacker has also placed reliance on the decision of the Apex Court in the case of Moti Ram v. North East Frontier Railway reported in A.I.R. 1964 S.C. p.621, wherein the Apex Court has held as under :- "65. What is the scope of the relevant words, "dismissed" and "removed" in Article 311 of the Constitution. The general rule of interpretation which is common to statutory provisions as well as to constitutional provisions is to find out the expressed intention of the makers of the said provisions from the words of the provisions themselves. It is also equally well settled that, without doing violence to the language used, a constitutional provision shall receive a fair, liberal and progressive construction, so that its true objects might be promoted. Article 311 uses two well-known expressions "dismissed" and "removed". The Article does not, expressly or by necessary implication, indicate that the dismissal or removal of a Government servant must be of a particular category. As the said Article gives protection and safeguard to a Government servant, who will otherwise be at the mercy of the Government, the said words shall ordinarily be given a liberal or at any rate their natural meaning, unless the said Article or other Articles of the Constitution, expressly or by necessary implication, restrict their meaning. I do not see any indication anywhere in the Constitution which compels the Court to reduce the scope of the protection. The dictionary meaning of the word "dismiss" is "to let go; to relive from duty". The word "remove" means "to discharge, to get rid off, to dismiss". In their ordinary parlance, therefore, the said words means nothing more or less than the termination of a person's office. The effect of dismissal or removal of one from his office is to discharge him from that office. In that sense, the said words, comprehend every termination of the services of a Government servant. Article 311 (2) in effect lays down that before the services of a Government servant are so terminated, he must be given a reasonable opportunity of showing cause against such a termination. There is no justification for placing any limitation on the said expressions, such as that the dismissal or removal should have been the result of an enquiry in regard to the Government servant's misconduct. The attempt to imply the said limitation is neither warranted by the expressions used in the Article or by the reason given, namely, that otherwise there would be no point in giving him an opportunity to defend himself. If this argument be correct, it would lead to an extra-ordinary result, namely, that a Government servant who has been guilty of misconduct would be entitled to a "reasonable opportunity" whereas an honest Government servant could be dismissed without any such protection. In one sense the conduct of a party may be relevant to punishment; ordinarily punishment is meted out for misconduct, and if there is no misconduct there could not be punishment. Punishment is, therefore, correlated to misconduct, both in its positive and negative aspects. That is to say, punishment could be sustained if there was misconduct and could not be meted out if there was no misconduct. Reasonable opportunity given to a Government servant enables him to establish that he does not deserve the punishment, because he has not been guilty of misconduct. That apart, a Government servant may be removed or dismissed for any other reasons, such as retrenchment, abolition of post, compulsory retirement and others. If an opportunity is given to a Government servant to show cause against the proposed action, he may plead and establish that either there was no genuine retrenchment or abolition of posts or that others should go before him." Thus, the word terminated is used in the present case. The order in the present case is simple discharge. It is punitive action, without any stigma. 3.1.5. The main contention of Mr. Thacker is that "discharge" includes "termination" is giving too wide a meaning of the word "discharge". As stated hereinabove, in view of the judgement of the apex court, the word is to be read with reference to the context of the object of the Act. 3.1.6. In the decision of the Apex Court in the case Parshotam Lal Dhingra v. Union of India, reported in A.I.R. 1958 S.C. p.36, wherein it is held as under :- "26. The foregoing conclusion, however, does not solve the entire problem, for it has yet to be ascertained as to when an order for the termination of service is inflicted as and by way of punishment and when it is not. It has already been said that where a person is appointed substantively to a permanent post in Government service, he normally acquires a right to hold the post until under the rules, he attains the age of superannuation or is compulsorily retired and in the absence of a contract, express or implied, or a service rule, he cannot be turned out of his post unless the post itself is abolished or unless he is guilty of misconduct, negligence, inefficiency or other disqualifications and appropriate proceedings are taken under the service rules read with Art. 311(2). Termination of service of such a servant so appointed must per se be a punishment, for it operates as a forfeiture of the servant's rights and brings about a premature end of his employment. Again where a person is appointed to a temporary post for a fixed term of say five years his service cannot, in the absence of a contract or a service rule permitting its premature termination be terminated before the expiry of that period unless he has been guilty of some misconduct, negligence, in. efficiency or other disqualifications and appropriate proceedings are taken under the rules read with Art. 311(2). The premature termination of the service of a servant so appointed will prima facie be a dismissal or removal from service by way of punishment and so within the purview of Art. 311(2). Further, take the case of a person who having been appointed temporarily to a post has been in continuous service for more than three years or has been certified by the appointing authority as fit for employment in a quasipermanent capacity, such person, under r. 3 of the 1949 Temporary Service Rules, is to be deemed to be in quasi-permanent service which, under r. 6 of those Rules, can be terminated (i) in the circumstances and in the manner in which the employment of a Government servant in a permanent service can be terminated or (ii) when the appointing authority certifies that a reduction has occurred in the number of posts available for Government servants not in permanent service. Thus when the service of a Government servant holding a post temporarily ripens into a quasi-permanent service as defined in the 1949 Temporary Service Rules, he acquires a right to the post although his appointment was initially temporary and, therefore, the termination of his employment otherwise than in accordance with r. 6 of those Rules will deprive him of his right to that post which he acquired under the rules and will prima facie be a punishment and regarded as a dismissal or removal from service so as to attract the application of Art. 311. Except in the three cases just mentioned a Government servant has no right to his post and the termination of service of a Government servant does not, except in those cases, amount to a dismissal or removal by way of punishment. Thus where a person is appointed to a permanent post in a Government service on probation, the termination of his service during or at the end of the period of probation will not ordinarily and by itself be a punishment, for the Government servant, so appointed, has no right to continue to hold such a post any more than the servant employed on probation by a private employer is entitled to do. Such a termination does not operate as a forfeiture of any right of the servant to hold the post, for he has no such right and obviously cannot be a dismissal, removal or reduction in rank by way of punishment. This aspect of the matter is recognised in the Explanation to r. 49 of the 1930 Classification Rules which correspond to the Note to r. 1702 of the Indian Railway Code and r. 3 of the 1955 Rules and r. 13 of the 1957 Rules, for all those rules expressly say that the termination of such an appointment does not amount to the punishment of dismissal or removal within the meaning of those rules. Likewise if the servant is appointed to officiate in a permanent post or to hold a temporary post other than one for a fixed term, whether substantively or/on probation or on an officiating basis, under the general law, the implied term of his employment is that his service may be terminated on reasonable notice and the termination of the service of such a servant will not per se amount to dismissal or removal from service. This principle also has been recognised by the Explanations to r. 49 of the 1930 Classification Rules corresponding to the Note to r. 1702 of the Indian Railway Code and r. 5 of the 1949 Rules and r. 3 of the 1955 Rules and r. 13 of the 1957 Rules. Shortly -put, the principle is that when a servant has right to a post or to a rank either under the terms of the contract of employment, express or implied, or under the rules governing the conditions of his service, the termination of the service of such a servant or his reduction to a lower post is by itself and prima facie a punishment, for it operates as a forfeiture of his right to hold that post or that rank and to get the emoluments and other benefits attached thereto. But if the servant has no right to the post as where be is appointed to a post, permanent or temporary either on probation or on an officiating basis and whose temporary service has not ripened into a quasipermanent service as defined in the Temporary Service Rules, the termination of his employment does not deprive him of any right and cannot, therefore, by itself be a punishment. One test for determining whether the termination of the service of a Government servant is by way of punishment is to ascertain whether the servant, but for such termination, had the right to hold the post. If he had a right to the post as in the three cases hereinbefore mentioned, the termination of his service will by itself be a punishment and he will be entitled to the protection of Art. 311. In other words and broadly speaking, Art. 311 (2), will apply to those cases where the Government servant, had he been employed by a private employer, will be entitled to maintain an action for wrongful dismissal, removal or reduction in rank. To put it in another way, if the Government has, by contract, express or implied, or, under the rules, the right to terminate the employment at any time, then such termination in the manner provided by the contract or the rules is, prima facie and per se, not a punishment and does not attract the provisions of Art. 311. 3.1.7. In the decision of the Apex Court in the case of The Workmen of Sudder Office, Cinnamara v. The Management of Sudder Office & Anr., reported in 1971 (II) L.L.J. p.620, wherein the Apex Court has observed as under :- "19. Before we consider the contentions of the learned counsel on both sides, it is necessary to refer to Cl.9 of the standing orders of the company. Clause 9 of the standing orders is as follows :- "9.Termination of an employment and notice thereof, to be given by the employer and workmen. Notice of termination of employment, whether by manager or by worker shall be given equal to the wage-period of the worker concerned. Provided that - (a) the manager may terminate the employment of a worker forthwith and pay his wages for the wage period (equivalent to his average earnings over the preceding period of three months) in lieu of notice. (b) Notice of termination of employment shall be necessary only in case of permanent workers and not in the case of outside or temporary workers except in so far as is laid down in any agreement entered into between the manager and such outside or temporary workers. (c) The manager may dismiss without notice any worker who is guilty of