IN THE HIGH COURT OF JUDICATURE, ANDHRA PRADESH AT HYDERABAD HON’BLE SRI JUSTICE A.GOPAL REDDY & HON'BLE SRI JUSTICE P. DURGA PRASAD WRIT APPEAL No.192 of 2003 Date: 31.12.2010 Between: United India Insurance Co., Limited, rep. by its Chiarman and Managing Director and another .....Appellants AND: T. Purushotham Reddy ....RESPONDENT HON’BLE SRI JUSTICE A.GOPAL REDDY & HON'BLE SRI JUSTICE P. DURGA PRASAD WRIT APPEAL No.192 of 2003 JUDGMENT:(per Honourable Sri Justice P. Durga Prasad) This is an appeal filed under Clause 15 of Letters Patent questioning the order passed in W.P.No.510 of 2002 dated 21.11.2002 by the learned Single Judge of this Court. The writ petitioner has filed petition to declare the proceedings HO.PER:PNA:5086:2001 dated 12.12.2001 is illegal and without jurisdiction; to declare that there is no relationship of employer and employee between the petitioner and the respondent. It is the case of the writ petitioner that while he was working as Divisional Manager at Divisional Office-IX Begumpet, he tendered his resignation on 25.08.1999 due to his personal reasons and sought for relieving from services of the Company on 24.09.1999 and also requested for waiver of the notice period of two months. The Regional Manager of the writ appellant company has not considered his request by letter dated 23.09.1999 and thereafter the writ petitioner was transferred to Regional Office as Assistant Manager by order dated 07.10.1999 and he handed over the charge to his successor at the Divisional Office-IX on 11.10.1999 and thereafter he addressed a letter to the respondent company to deduct the short fall in notice and relieve him from the services of the company. Thereafter, the petitioner has received a letter dated 25.10.1999 stating that the resignation of the petitioner was not accepted on the ground that the action is being contemplated for certain alleged irregularities. Thereafter, the petitioner was issued a letter dated 01.11.1999 for not reporting duty at the Regional Office and his absence will be treated as unauthorised absence and appropriate action will be initiated against him. Subsequently, the petitioner addressed a letter to the Regional Manager on 08.11.1999 to settle his terminal benefits since he deemed to have been relieved from duties with effect from 11.10.1999, for which the Regional Manager addressed a letter stating that his resignation was not accepted and he continued to be on rolls of the company and advised him to show cause as to why disciplinary action should not be initiated for the alleged absence from 12.10.1999 treating it as unauthorised absence. Thereafter, the petitioner addressed another letter dated 23.11.1999 to the respondent company stating that he was deemed to have been relieved from the services of the company with effect from 11.10.1999 and therefore treating the same as unauthorised absence does not arise and again requested for settlement of his terminal benefits. While so, the petitioner received a cheque dated 26.10.1999 along with a letter dated 24.11.1999 for a sum of Rs.11,919.49 ps towards the salary for the month of October, 1999. Thereafter, the petitioner addressed a letter dated 26.11.1999 to the respondent company stating that he is entitled to salary only upto 11.10.1999 for the month of October, 1999 and the balance amount is being accepted under protest towards part settlement of terminal benefits and requested for settlement of all other terminal benefits to which he is entitled to. Subsequently, a memorandum of charges were issued alleging that the petitioner was un-authorisedly absent for a period of 46 days from 12.10.1999 to 26.11.1999, for which he has submitted a detailed explanation on 16.12.1999 and not satisfying with the explanation, an enquiry was ordered into the charges and the Enquiry Officer found the petitioner guilty for the said charge and thereafter the 2nd respondent imposed the major penalty of reduction to lower stage by three steps in the time scale applicable to that of Assistant Manager. The said proceedings are questioned by the writ petitioner on the ground that after submitting his resignation, he has been deemed to have been relieved with effect from 11.10.1999 and as such there is no employer and employee relationship between the writ petitioner and the respondent company and as such the disciplinary action taken against him is null and void. The Writ appellant Company has filed a counter pleading that the petitioner is relieved from service on 11.10.1999 so as to enable him to join in the Regional Office as per the transfer orders, but he has not been relieved from the duties and his submission of resignation vide his letter dated 25.08.1999, the notice period has been counted from the date of the said letter and a request for waiver of two months notice period by treating it as earned leave available to his credit, cannot be accepted in view of the rules of the respondent company and as the petitioner continued in service up to 07.10.1999 and his resignation was not accepted by the respondent company, he is deemed to be in service and for his unauthorised absence, the respondent company has rightly initiated disciplinary action as per the General Insurance (Conduct, Discipline and Appeal) Rules, 1975. The petitioner was in a great hurry to submit his resignation and leave the company as three co-employees were charge sheeted for the misappropriation of funds of the company and the matter is pending investigation with the C.B.I. Therefore, the contention of the petitioner that there is no relationship of employer and employee existing between him and the company is not tenable and the petitioner is not entitled for the reliefs as prayed for in the writ petition. The learned Single Judge of this Court has allowed the writ petition holding that the petitioner has issued a notice of three months as required under the General Insurance (Termination, Superannuation and Retirement of Officers and Development Staff) Scheme, 1976 and as there is shortfall in the notice period as per paragraph 5(2) of the said scheme, the writ appellant is only entitled to recover the amount towards balance of the notice period from the monies due to the petitioner towards terminal benefits in the absence of any stipulation in the said scheme for acceptance of the resignation by the writ appellant company, the writ petitioner deemed to have been resigned from service with effect from 24.09.1999 and from that date there is no relationship of employer and employee between him and the writ appellant company. Now the learned counsel for the writ appellant has pleaded that as per paragraph 5(1) of the General Insurance (Termination, Superannuation and Retirement of Officers and Development Staff) Scheme, 1976, the writ petitioner has to give notice of three months and as per Explanation-II, the officer is not entitled to set off any earned leave as against the notice period and the writ appellant company has rightly rejected for waiving the balance of two months notice period and intimated that the resignation of the writ petitioner was not accepted and as such he is deemed to have been continued in service. Since the writ petitioner was absent from duty from 07.10.1999, the writ appellant company has rightly initiated disciplinary action against him and imposed major punishment under the impugned order. The learned counsel for the writ petitioner on the other hand while sustaining the judgment contended that as per Clause-5(1) of the Scheme as the petitioner rightly issued a notice of his intention to discontinue from service by his letter dated 25.08.1999 by resign from the service with effect from 24.09.1999 and requested for waiver of two moths balance period on the ground that he has earned leave to his credit. In case he is not entitled for set of leave earned, for waiver of the said notice period, the respondent company is entitled to recover the same from his terminal benefits as per paragraph 5(2) of the said scheme. Since there is no provision in the said scheme for accepting the resignation, petitioner is deemed to have been resigned from the services with effect from 24.09.1999. Now the only question that arises for determination is whether there is any subsisting relationship of employer and employee between the writ appellant and the writ petitioner as on the date of issuance of the memorandum of charges i.e., on 29.11.1999 by which the impugned disciplinary proceedings were issued against the writ petitioner. There is no dispute that the writ petitioner has submitted his resignation on 25.08.1999 effecting from 24.09.1999 and requesting the company to waive the balance of two months notice period treating the earned leave available to his credit as set off and the same was not accepted by the writ appellant and subsequently the writ petitioner was transferred to Regional Officer and by order dated 07.10.1999 he was relieved from the office on 11.10.1999 and thereafter he did not join duty in the Regional Office for which disciplinary action was initiated for his absence from 11.10.1999. The contention of the learned counsel for the writ appellant is that since the waiver of two months notice period was not accepted by the writ appellant company and his resignation was not accepted and the same was intimated to the writ petitioner vide letter dated 25.10.1999, he is deemed to be continued in the service and as such the writ appellant company has rightly initiated disciplinary proceedings for his unauthorised absence. The learned counsel for the writ petitioner has relied upon a decision rendered in State of Haryana v. S.K. Singhal[1] wherein it was held: “The respondent, who was a Medical Officer, gave three moths’ notice on 16.08.1995 seeking voluntary retirement under Rule 5.32(B) of the Punjab Civil Services Rules, Vol.II, on completing 20 years’ qualifying service. He did not get any response to this notice till expiry of three months i.e., 16.11.1995 but subsequently he was informed vide order dated 13.12.1995 that he could not be deemed to have retired. There was a controversy about respondent’s absence from duty after sending official work or he could not join duty due to unavoidable reasons. The issue before the Supreme Court was whether the respondent was deemed to have automatically retired from service when permission to retire was not refused within the period of notice and held that Rules applicable in various government department provide for voluntary retirement by giving notice (say for three months). Some rules are couched in language which results in automatic retirement on expiry of period specified in employee’s notice whereas in some rules, the language makes it clear that even on expiry of the period specified in the notice, retirement is not automatic and as express order granting permission is required to be communicated. Master-servant relationship in the latter type of rules continues after the period specified in notice, till such acceptance is communicated; refusal of permission can also be communicated after notice period and the employee continues to be in service.” The other decision relied upon by the learned counsel for the writ appellant is rendered in Dr. Baljit Singh v. State of Haryana[2] wherein it was held: “The petitioner while working as HCMS-II has tendered his voluntary retirement expressing his intention that he may be prematurely retired under Rule 5.32(B) of the Punjab Civil Services Rules under which a government service is given liberty to tender voluntary retirement by giving notice of not less than three months. Accordingly, on 20.09.1993, he had given the notice. On his own showing, he handed over the charge on 11.02.1994 even without acceptance of voluntary retirement. Thereafter, the authority by proceedings dated 25.02.1994 declined to accept his retirement which he challenged in the High Court. The High Court refused to interfere with the order passed by the Government. Under these circumstances, the Tribunal held that he was entitled to retire from service and the order of removal should, therefore be treated as non est. The learned counsel for the petitioner has pleaded that under the circumstances, he is entitled to retire; due to his family circumstances he tendered his resignation; on expiry of three months’ notice the petitioner is entitled to relinquish his office; the Government has no option but to accept his voluntary retirement. In support of his contention, he placed reliance on the judgment reported in Union of India v. Sayed Muzaffar Mir[3] therein while the respondent was under suspension pending enquiry, he tendered his voluntary retirement on 22.07.1985 under Rule 1802(b) of the Indian Railway Establishment Code. The period of three months had expired on 21.10.1985. The order of removal was passed against him on 04.11.1985. Under those circumstances, the Tribunal held that he was entitled to retirement from service and the order of removal should, therefore, be treated as non est. Therefore, mere expiry of three months period of notice given, does not automatically put an end to jural relationship of employer and employee between the Government and the delinquent official. Only on acceptance by the employer of resignation or request for voluntary retirement their jural relationship ceases. Therefore, it would be necessary that the Government take appropriate decision whether the delinquent would be permitted to retire voluntarily from service pending the action against him. Relying the above decisions, the learned counsel for the writ appellant pleaded that even in the present case also, C.B.I enquiry is pending against the writ petitioner and he wanted to resign to his services by giving three months notice and the writ appellant company has rightly rejected his resignation and initially taken disciplinary action against him for his unauthorised absence and as the resignation of the writ petitioner was not accepted by the writ appellant company, the petitioner deemed to have been continued in service. The writ appellant company has formulated a scheme called as General Insurance (Termination Superannuation and Retirement of Officers and Development Staff) Scheme, 1976 which has been issued in S.O.No.627(E) by the competent authority-Central Government in purported exercise of the powers under Section 16(1)(g) of the General Insurance Business (Nationalisation) Act, 1972. The petitioner is an officer of the respondent and the respondent writ appellant is a company within the meaning of the provisions of the said scheme. Paragraph 5 of the said scheme is relevant for resolution of the lis pending in this case as follows: “5) Determination of Service: (1) An officer or a person of the Development Staff, other than one on probation, shall not leave or discontinue his service without first giving notice in writing to the appointing authority of his intention to leave or discontinue the Service and the period of notice required to be given shall be three months; Provided that such notice may be waived in part or in full by the appointing authority as it discretion. Explanation-I: In this Scheme, month shall be reckoned according to the English calendar and shall commence from the day following that on which the notice is received by the Corporation or the Company, as the case may be; Explanation-II: A notice given by an officer or a person of the Development Staff under this paragraph shall be deemed to be proper only if he remains on duty during the period of notice and such officer or person shall not be entitled to set off any leave earned against the period of such notice. (2) In case of breach by any officer or a person of the Development Staff of the provisions of sub-paragraph (1) he shall be liable to pay to the Corporation or the Company concerned, as the case may be, as compensation a sum equal to his salary for the period of notice required of him which sum may be deducted from any monies due to him.” As per paragraph 5(2) of the said scheme, an officer or a person of the Development Staff of the provisions of sub-paragraph (1) he shall be liable to pay to the Corporation or the company concerned, as the case may be, as compensation a sum equal to his salary for the period of notice required of him which sum may be deducted from any monies due to him. Therefore, as per the said scheme, the petitioner has to give three months notice to leave or discontinue the service. In the present case, the petitioner has submitted his resignation on 25.08.1999 resigning his services with effect from 24.09.1999 and sought for waiver of two months notice period requesting to set off the earned leave available to his credit but as per explanation-II of the said paragraph 5(1), the petitioner is not entitled to set off the earned leave available to his credit against the period of said notice. Therefore, the writ appellant company has rightly rejected his request for waiver of two months notice. But, as per Clause-II of Explanation-II of the said Paragraph 5 in case of breach by any officer or a person of the Development Staff of the provisions of sub-paragraph (1) he shall be liable to pay to the Corporation or the Company concerned, as the case may be, as compensation a sum equal to his salary for the period of notice required of him which sum may be deducted from any monies due to him. Therefore, as per the said clause-II of the paragraph-5, the writ appellant is only entitled to recover the balance amount for the balance two months notice period from the monies payable to the petitioner. Admittedly, there is no provision contemplated in the said scheme for accepting the resignation and on such acceptance only the resignation will come into effect. In the above said decisions relied upon by the learned counsel for the writ appellant, it is observed that the rules normally provides that the voluntary retirement can only be come into effect only from the date of the acceptance by the Government. In the present scheme, there is no such rule providing for accepting the resignation. If both the rules in pargraph-5 of the said scheme are read harmoniously it only evolves that the petitioner is entitled to discontinue from service by giving three months notice and in case if there is any shortfall of the said notice period, the appellant company is only entitled to compensation a sum equal to his salary for the period of notice and the same has to be deducted from any monies due to him. Therefore, the above decisions relied upon by the learned counsel for the appellant are not applicable to the present case. The contention of the learned counsel for the writ appellant that the petitioner was in hurry to leave the service as disciplinary action being contemplated to be initiated against him for the misconduct committed by him and as the matter is pending investigation by the C.B.I. But, it is not the case of the writ appellant that the action was initiated basing on the report of the C.B.I against the writ petitioner and the present action was initiated by issuing the charge sheet dated 29.11.1999 by which date resignation submitted by the writ petitioner came into effect. Therefore, as on the date of initiation of the disciplinary proceedings against the writ petitioner, he is deemed to have been relieved from the service as per his resignation letter dated 25.08.1999. Simply because the petitioner continued in service upto to 11.10.1999, it cannot be said that the writ petitioner continued in service even after expiry of the notice period of resignation which come into force on 25.09.1999. Since the petitioner continued in service upto 11.10.1999 and there is shortfall of three months notice as per paragraph 5(1) and as per paragraph 5(2) of the scheme, the writ appellant company is entitled to recover compensation towards the salary for the balance notice period. Thus, the finding of the learned Single Judge of this Court holds good and the services of the writ petitioner comes to an end with effect from 24.09.1999 and the writ appellant is entitled for recovery of the balance notice period from the terminal benefits payable to the writ petitioner. Accordingly, the writ appeal is dismissed without costs. ____________________ A.GOPAL REDDY,J ______________________ P. DURGA PRASAD,J December 31st , 2010 GK. HON’BLE SRI JUSTICE A.GOPAL REDDY & HON'BLE SRI JUSTICE P. DURGA PRASAD WRIT APPEAL No.192 of 2003 Date: 31.12.2010 Gk. [1] (1994) 4 Supreme Court Cases 293 [2] (1997) 1 Supreme Court Cases 754 [3] 1995 Supp 91) SCc 76