Case: Secretary, O.N.G.C. Ltd.  Vs. V.U. Warrier

4. The respondent hereinpetitioner before the High Courtwas in service of Oil and Natural Gas Commission, ("Commission" for short) appellant herein. He was holding the post of Additional Director (Finance & Accounts) prior to his retirement. As an employee of the Commission, he was allotted quarter on December 10, 1982. He retired from service on reaching the age of superannuation with effect from February 28, 1990. It is the case of the appellant that after the retirement, an employee has to vacate the residential accommodation given to him by the Commission. The respondent, therefore, was informed by the Commission that he had to vacate the quarter. It was the policy of the Commission to grant four months time to retain a quarter by an employee after his retirement. Accordingly, the respondent was asked to handover vacant and peaceful possession of the quarter to the Commission latest by 30th June, 1990. It is an admitted fact that the respondent did not vacate the quarter. It has come on record that he made representations to permit him to continue to occupy the quarter but those representations were rejected. Since the respondent did not vacate the quarter, proceedings were also initiated by the Commission under the Public Premises (Eviction of Unauthorised Occupants) Act, 1971. In those proceedings, an undertaking was given by the respondent that he would vacate the quarter latest by May 30,1991. Pursuant to the said undertaking, the respondent vacated the quarter on May 16m 1991. Eviction proceedings were then dropped.5. The respondent claimed an amount of gratuity payable to him. According to the respondent, he was entitled to Rs. one lakh towards payment of gratuity. The Commission, however, deducted an amount of Rs.53,632/towards unauthorized occupation charges of official accommodation from July 01, 1990 to May 15, 1991 at the rate of Rs.5,100/being 75 per cent of the basic pay of Rs.6,800/per month. According to the respondents, it was not open to the Commission to deduct any amount payable to him towards gratuity. He, therefore, approached the High Court of Judicature at Bombay challenging the action. He prayed for quashing of an order of appropriation of Rs.53,632/as unauthorized occupation charges of official accommodation from July, 1990 to May, 1991 at the rate of Rs.5,100/by permanently restraining the Commission from recovering the said amount. A prayer was also made to direct the Commission to pay the amount of gratuity with interest.6 An affidavit in reply was filed by the Commission. In the counter, the Senior Deputy Director (Personnel & Administration), stated that the Commission was a statutory Corporation established in 1960 under the Oil and Natural Gas Commission Act, 1959.The Commission was paying 30 per cent basic pay as HRA to those employees who could not be allotted accommodation by the Commission at selected centres like Delhi, Bombay, etc., but used to recover only 7 1/2 per cent basic pay as HRA from the employees on allotment of accommodation. In the event of unauthorized occupation of staff accommodation, liquidated damages are recoverable as double the rent i.e. 371/2 x 2= 75% of basic pay till the accommodation is vacated by the incumbent. A copy of the office order dated January 30, 1990 was also annexed to the affidavit in reply. It was submitted that though the respondent retired on February 28, 1990 and was allowed four months time to occupy the quarter as per the policy of the Commission, the failed to vacate the quarter. His prayer for retention of quarter was considered by the Commission but in view ofof quarters to several other employees, the prayer was rejected and the respondent was asked to vacate it. He was also informed that in case, he would not vacate the quarter, penal rent at the rate of 75% of basic salary would be recovered from him. In spite of such communications and letters, the respondent failed to vacate the quarter. The Commission was required to initiate eviction proceedings and only thereafter an undertaking was filed and possession of quarter was given back to Commission. In the circumstances, the Commission was within its power to deduct the amount recoverable from the respondent towards unauthorized occupation of residential quarter from July 1, 1990 till May 15, 1991 and the employee had no reason to make grievance against it.At the time of hearing of the petition, an advocate appeared for the respondentbefore the HighNone, however, appeared for the Commission. According to the High Court, the legal position was no more res integra that pension and gratuity were rights accrued in favour of employees on their retirement. Those benefits, therefore, could not be withheld even if an employee unauthorisedly occupied accommodation and was, therefore, liable to pay damages or penal rent under the relevant rules. The only remedy available to the employer was to take appropriate action but the amount of pensionary benefit could not be set off against thedues for unauthorized occupation. The Court also referred to State of Kerala vs. M. Padmanabhan Nair, (1985) 1 SCC 429 , R. Kapur vs. Director of Inspector (Painting & Publication) Income Tax & another, (1994) 6 SCC 589  and Gorakhpur University & others vs. Shilla Prasad Nagendra (Dr.) & others, (2001) 6 SCC 591. 13. The writ petition was accordingly allowed and the following directions were issued by theAccording to the Commission, it was not aware of the decision of the High Court dated 15th February, 2003, since none appeared on behalf of the Commission in the High Court at the time of hearing of the petition and the decision was ex parte. It, therefore, made necessary enquiry. As soon as it came to know about the decision of the High Court, it addressed a letter dated May 22, 2003, to the advocate appearing for the Commission and asked him under what circumstances he could not attend the matter which came to be decided ex parte against the Commission. The advocate vide his letter dated May 24, 2003 informed the appellant that he had been advised to take rest as he was suffering from Filariasis. According to the appellant, thus, absence of the advocate appearing for the Commission was neither intentional nor deliberate but due to his ill health. The appellant thereafter applied for certified copy of the judgment which was sent to Head Office, Dehradun. Relevant papers were then collected from the office of the advocate. After getting approval from the Head Office, new advocate was appointed on August 11, 2003, who was asked to file Review Petition which was filed on December 12, 2003. There was thus delay of 116 days in filing the review petition. The Division Bench rejected the Review Petition observing that there was no explanation for the the period from May 24, 2003 to September 6, 2003. In the opinion of the Court, there was no cause much less sufficient cause for condonation of delay. The review application was, therefore, rejected.15. On March 29, 2004, this Court issued notice on the Special Leave Petition as well as on the prayer of interim relief. On October 25, 2004, an order was passed to place the matter for final disposal on any miscellaneous day. The matter was accordingly placed for hearing on January 31, 2005 and remained part heard. On February 4, 2005, the matter was heard and the learned counsel for the parties completed their arguments.

Reasoning:
18. Having heard the learned counsel for the parties, in our opinion, the appeals deserve to be allowed. It is no doubt true that pensionary benefits, such as gratuity, cannot be said to be bounty. Ordinarily, therefore, payment of benefit of gratuity cannot be withheld by an employer. In the instant case, however, it is the specific case of the Commission that the Commission is having a statutory status. In exercise of statutory powers under Section 32(1) of the Act, regulations know as the Oil and Natural Gas Commission (Death, Retirement and Terminal Gratuity) Regulations, 1969 have been framed by the Commission. In Sukhdev Singh vs. Bhagatram Sardar Singh Raghuvanshi & Another, (1975), 1 SCC 421 the Constitution Bench of this Court held that regulations framed by the Commission under Section 32 of the Oil and Natural Gas Commission Act 1959 are statutory in nature and they are enforceable in a court of law. They provide for eligibility of grant of gratuity, extent of gratuity, etc.The above regulation leaves no room of doubt that the Commission has right to effect recovery of its dues from any officer without his consent from gratuity. In the present case admittedly the respondent retired after office hours of February 28, 1990. According to the Commission, he could be allowed four months time to occupy the quarter which was granted to him. His prayer for extension was considered and rejected stating that it would not be possible for the Commission to accept the prayer in view of several officers waiting for quarters. He was also informed that if he would not vacate the quarter, penal rent as per the policy of the Commission would be recovered from him. But the respondent did not vacate the quarter. It was only after eviction proceedings were initiated that he vacated the quarter on May 16, 1991. In the circumstances, in our opinion, it cannot be said that the action of the Commission was arbitrary, unlawful or unreasonable. It also cannot be said that the Commission had no right to withhold gratuity by deducting the amount which is found due to Commission and payable by the respondent towards penal charges for unauthorized occupation of the quarter for the period between July 1, 1990 and May 15, 1991.21. So far as the Payment of Gratuity Act is concerned, according to the appellant, the said Act was not applicable to the respondent. We are concerned with the position as in 1990. Clause (e) of Section 2 of the Act definedFrom the above definition, it is clear that a person can be said to be an "employee" if this wages did not exceed two thousand five hundred rupees per month. According to the Commission, the salary of the respondent was Rs.6800/approximately which was more than Rs.2500/and hence, he could not be held "employee" covered by the definition. The definition of "employee" was no doubt amended subsequently and the provision as to amount of wages had been deleted. But the amendment was made in 1994 and was not retrospective in nature and thus was not applicable in the case of the respondent who retired in 1990.23. As held by this Court in Union of India vs. All India Services Pensioners Association & another, (1988) 2 SCC 580 , an incumbent is entitled to those benefits as he could claim on the date of retirement. He could not claim any benefit prior to his appointment or subsequent to his retirement.24. It is well settled that gratuity is earned by an employee for long and meritorious service rendered by him. Gratuity is not paid to the employee gratuitously or merely as a matter of boon. It is paid to him for the service rendered by him to the employer [vide Garment Cleaning Works vs. Its Workmen, (1962) 1 SCR 711 ]. In Calcutta Insurance Co. Ltd. vs. Their Workmen, (1967) 2 SCR 596 , after considering earlier decisions, this Court observed that "long and meritorious service" must mean long and unbroken period of service meritorious to the end. As the period of service must be unbroken, so must the continuity of meritorious service be a condition for entitling the workman to gratuity. If a workman commits such misconduct as causes financial loss to his employer, the employer would under the general law have a right of action against the employee for the loss caused and making a provision for withholding payment of gratuity where such loss caused to the employer does not seem to aid to the harmonious employment of labourers or workmen. The Court proceeded to state that the misconduct may be such as to undermine the discipline in the workersa case in which it would be extremely difficult to assess the financial loss to the employer.The ratio in R. Kapoor, in our opinion, does not help the respondents as in that case, the claim for damages for unauthorized occupation against theemployee was "pending" and the proceedings were not finally disposed of. In the present case, the facts clearly reveal that the last day of lawful occupation of quarter by the respondent was June 30, 1990 and before that date, the appellant Commission had informed the respondent that his prayer for extension or retention of quarter had not been accepted and he should vacate by June 30, 1990. If he would not vacate the quarter, penal rent would be recovered from him. He did not challenge the action of not extending the period nor the recovery of penal rent. He, therefore, cannot make grievance against the action of the Commission.27. Similar is the case of Gorakhpur University. There retrial benefits were withheld to adjust amount due from the employee but "disputed" by him. This Court noted that the employee was keeping a quarter allotted to him and continued to occupy after retirement. It was, inter alia, observed by this Court that after the employee retired, his request and application as per practice for allotment of quarters in the name of his son who was also an employee in the University remained pending and no orders were passed thereon. Moreover, there were resolutions of the University to waive penal rent and such benefits were granted to other employees, but different treatment was shown to him which constituted "hostile discrimination" and the act was thus `unreasonable. Though the employee retired in 1990 and continued to keep the quarter up to 1996, the University did not choose to take any action to evict him. On the contrary, it acquiesced in his occupation "by accepting regularly the normal rent". Thus, there was lack of bona fides on the part of the University.As already adverted to by us hereinabove, the facts of the present case did not deserve interference by the High Court in exercise of equitable jurisdiction under Article 226 of the Constitution. Thebefore the Highwas a responsible officer holding the post of Additional Director (Finance & Accounts). He was, thus, "gold collar" employee of the Commission. In the capacity of employee of the Commission, he was allotted a residential quarter. He reached the age of superannuation and retired after office hours of February 28, 1990. He was, therefore, required to vacate the quarter allotted to him by the Commission. The Commission, as per its policy, granted four months time to vacate. He, however, failed to do so. His prayer for continuing to occupy the quarter was duly considered and rejected on relevant and germane grounds. The residential accommodation constructed by him by taking loan at the concessional rate from the Commission was leased to Commission, but the possession of that quarter was restored to him taking into account the fact that he had retired and now he will have to vacate the quarter allotted to him by the Commission. In spite of that, he continued to occupy the quarter ignoring the warning by the Commission that if he would not vacate latest by June 30, 1990, penal rent would be charged from him. In our judgment, considering all these facts, the High Court was wholly unjustified in exercising extraordinary and equitable jurisdiction in favour of the petitionerand on that ground also, the order passed by the High Court deserves to be set aside.