1 HIGH COURT OF MADHYA PRADESH: BENCH: INDORE (SINGE BENCH: HON.MR.JUSTICE PRAKASH SHRIVASTAVA WRIT PETITION NO.3636/2010(S) Manohar Maheshwari S/o Kanhaiyalal Maheshwari ... Petitioner Vs. MP State Warehousing & Logistic Corporation ... Respondent For petitioner: Shri Amit Agrawal with Shri R.K.Mangal, learned counsel. For respondent: Shri T.N.Sinh with Ms.Hemlata Gupta, learned counsel. Whether approved for reporting:- _______________________________________________________ O R D E R (Passed on 11th August, 2011) THIS Writ Petition has been filed by the petitioner challenging the order dated 20/11/2009 by which an amount of Rs.1,00,534/- has been directed to be recovered from the amount of gratuity payable. [2] The petitioner was working as Jr.Superintendent with the respondent and had retired on 31/8/2005 on reaching the age of superannuation. The respondent vide communication dated 3/10/2005 withheld a sum of Rs.1,00,534/- on account of shortage 2 of stock at Ratlam Branch. The petitioner had submitted representation protesting against withholding/recovery of the said amount and thereafter he had filed the Writ Petition No.6338/2006. This Court by order dated 23/1/2009 found that the action of the respondent was in complete disregard and violation of the principles of natural justice, therefore, this Court had quashed the impugned orders and given liberty to the respondents to initiate appropriate departmental proceedings in accordance with law. The respondent thereafter issued the show cause notice dated 29th June, 2009 which was challenged by the petitioner in WP No.4947/2009(S) and it was disposed of by order dated 31st July, 2009, expressing that the respondent will consider the grounds raised by the petitioner in the reply to the show cause notice and decide the same by a reasoned order. The petitioner submitted the reply to the show cause notice on 17/8/2009 and the respondents have passed the impugned order dated 20th November, 2009, upholding the decision to recover the said amount. [3] Learned counsel appearing for the petitioner submitted that the recovery from the gratuity can be made only in terms of the statutory provision and the conditions mentioned in Regulation 5 of the concerned regulations. He further submitted that even the show cause notice in terms of Regulation 5 was not given. He submitted that the respondents have not conducted departmental enquiry as 3 directed by this Court and the misconduct is not proved, therefore, the recovery cannot be made. He has also submitted that the shortage of stock has been calculated on the basis of the Circular dated 10/1/2003 which is not permissible since that circular has no retrospective effect. [4] Learned counsel for respondent has supported the impugned order and submitted that the impugned order has been passed after giving an opportunity of hearing and there is a finding relating to shortage of stock. He further submitted that no departmental enquiry is necessary since no penalty under the Rules has been imposed. [5] I have heard the learned counsel for parties and perused the record. [6] It is the settled position in law that any recovery from the gratuity amount can be made only under the statutory provisions. the Supreme Court in the matter of D.V.Kapoor Vs. Union of India and others reported in AIR 1990 SC 1923 has held that the right to gratuity is a statutory right like the right to pension. The measure of deprivation, therefore, must be co-relative to or commensurate with the gravity of the misconduct or irregularity as it offends the right to assistance at the evening of an employees life as assured under Art.41 of the Constitution. The order withholding gratuity after retirement as a measure of punishment not supported by any provision of law cannot be sustained. 4 [7] The Supreme Court in the matter of Bhagirathi Jena Vs. Board of Directors, O.S.F.C and others reported in (1999)3 SCC 666 has held that in the absence of any provision in the regulation, the employer has no legal authority to make any reduction in the retiral benefit. [8] Learned counsel for petitioner has raised an argument that the misconduct is required to be proved by conducting a regular departmental enquiry, but he has fairly conceded that deduction from gratuity is not one of the penalty prescribed under the Rules. Since the respondents are not imposing the penalty, therefore, they are not required to conduct a regular departmental enquiry which is to be conducted for imposing the penalty. [9] In the present case, the respondents have taken impugned action under Regulation 5 of the M.P. State Warehousing (Payment of Gratuity to Employees) Regulations, 1973 framed in exercise of the powers conferred by Section 42 of the Warehousing Corporation Act, 1962. The Regulation 5 reads as under:- “5. Payment of reduced amount of gratuity.-- Notwithstanding anything contained in the foregoing regulations, the Corporation may, while determining the amount of gratuity payable to an employee, take into account any financial loss caused to the Corporation by reason of inefficiency or misconduct of such employee and grant a reduced amount of gratuity,. Provided that the difference between the amount of gratuity ordinarily admissible under the foregoing regulations and the amount of gratuity so reduced shall not exceed the 5 amount of the financial loss caused to the Corporation”. [10] A bare reading of the aforesaid Regulation indicates that the Corporation has power to grant a reduced amount of gratuity in a case where financial loss is caused to the Corporation by reason of inefficiency or misconduct of the employee concerned. [11] This Court in the earlier round of litigation by order dated 23/1/2009 passed in WP No.6338/2006(s) had granted the following liberty to the respondents:- “However, the respondent-corporation would be at liberty, if so desired, to initiate appropriate departmental proceedings against the petitioner, in accordance with law, by first issuing a show cause notice to him in this regard, and thereafter, on consideration of the reply filed by him, and after holding such enquiry, as may be required in the matter, and affording an opportunity of hearing to the petitioner and by providing opportunity, to prove his defence, by passing a detailed and speaking order”. [12] Thereafter by the show cause notice dated 29th June, 2009, the petitioner was only asked to give an explanation in respect of the shortage of stock of wheat, rice and sugar found during the period 2001-2002 and 2002-2003 at Ratlam Branch. The petitioner was not required to show cause if the said shortage was caused on account of his negligence or misconduct. The show cause notice also does not state about the proposed reduction in gratuity under Regulation 5. therefore, the reply which the petitioner had submitted in response to the show cause notice was confined to the explanation in respect of the shortage of stock. The petitioner had no opportunity 6 to respond to the allegation that the shortage was on account of his negligence or misconduct. He was not informed about the proposed step to be taken in accordance with Regulation 5. [13] Though, in the impugned order, the respondents have found that there was shortage of stock beyond the permissible limit, but no material has been discussed on the basis of which the conclusion can be arrived at that the shortage of stock was on account of the negligence or misconduct of the petitioner. The observation about dereliction of duty has been made on the basis of inference on account of the fact that he was working as Branch Manager and responsible for maintaining the stock. [14] If an order under Regulation 5 was to be passed by the respondents, then, they were required to give an opportunity of hearing to the petitioner in terms of the direction of this Court in respect of negligence or misconduct of the petitioner as required under Regulation 5, but no such opportunity was given to the petitioner, therefore, the impugned order cannot be sustained. [15] Even otherwise, it is noticed that the petitioner had raised the specific plea before the respondents that the Circular dated 10/1/2003 will not be applicable in respect of the calculation of shortage of stock for the previous period ie 2001-2002, 2002-2003, but the respondents have not properly dealt with that issue and have simply stated that the calculation in such a manner is regularly done 7 in the department. The respondents were required to give a justifiable reason for applying the Circular dated 10/1/2003 for the back period. [16] In view of the aforesaid, the impugned order cannot be sustained and is hereby set aside. The respondents, however, will be at liberty to take fresh action in accordance with the law. No costs. (Prakash Shrivastava) JUDGE vm