# Madhusudan Agarwal v. State of U.P. & Ors

- **Citation:** (2015) 2 ILRA 738
- **Court:** High Court of Judicature at Allahabad
- **Decided:** 2015-04-18
- **Case number:** C.M.W.P. No. 36019 of 2008
- **Bench:** Mahesh Chandra Tripathi
- **Source:** https://unisonlegal.in/judgment/allahabad-high-court/madhusudan-agarwal-v-state-of-u-p-ors-43299
- **Pages:** 7

## Headnote

Payment of Gratuity Act 1972-Section
4(6)-deductions from gratuity-without
full fledged disciplinary enquiry-merely
on basis of show cause notice-held none
of contingencies of Section 4(6) of Actfulfilled-principle
of
Natural
Justiceviolated-deduction order quashed-with
direction to refund all recovered amount
with 9% interest.
Held: Para-14
It is admitted case that in the present
matter no departmental enquiry has
taken place. Only on the basis of show
cause the department had proceeded
into the matter and took final decision
and held that the petitioner was liable to
pay Rs.5,86,562/-, which is against the
principle of natural justice. While in
service
neither
preliminary
nor
full
fledged departmental enquiry has been
made in the matter. No adverse material
has been brought on record against the
petitioner in his career.
Case Law discussed:
{2015 (2) ADJ 673 (DB)(LB)}; 2015 (3) ADJ
305 (DB); 2009 (2) SLJ 105; (2007) (2) BLJR
2847); Letters Patent Appeal No. 113 of 2012.

## Text

738
 INDIAN LAW REPORTS ALLAHABAD SERIES
compliance cannot be condoned or
overlooked by the Court. There is no
provision in the statute that would provide
either for extension of time or to condone
the default in depositing the rent within
the stipulated period, the Court does not
have the power to do so.
13. The Constitution Bench of the
Supreme Court in Radhey Shyam and
another vs. Chhabi Nath and others,8 held
that writ petition under Article 226 of the
Constitution is not maintainable against a
judicial order of a court .The Court
approved the ratio laid down in Shalini
Shetty and another vs. Rajendra Shankar
Patil9, that no petition can be entertained
in writ jurisdiction being a dispute
between landlord and tenant i.e. amongst
private parties.
14. For the reasons and law stated
herein above, I do not find any illegality
or irregularity in the impugned order
dated 16 April 2011 passed by first
respondent, Judge Small Causes Court,
Gorakhpur.
15. The writ petition is dismissed,
both on merit and maintainability.
16. Interim order, if any, stands
vacated.
17. No order as to costs.
--------
ORIGINAL JURISDICTION
CIVIL SIDE
DATED: ALLAHABAD 18.04.2015
BEFORE
THE HON'BLE MAHESH CHANDRA TRIPATHI, J.
C.M.W.P. No. 36019 of 2008
Madhusudan Agarwal
 ...Petitioner
Versus
State of U.P. & Ors.
...Respondents
Counsel for the Petitioner:
Sri Anil Kumar Bajpai
Counsel for the Respondents:
C.S.C.
Payment of Gratuity Act 1972-Section
4(6)-deductions from gratuity-without
full fledged disciplinary enquiry-merely
on basis of show cause notice-held none
of contingencies of Section 4(6) of Actfulfilled-principle
of
Natural
Justiceviolated-deduction order quashed-with
direction to refund all recovered amount
with 9% interest.
Held: Para-14
It is admitted case that in the present
matter no departmental enquiry has
taken place. Only on the basis of show
cause the department had proceeded
into the matter and took final decision
and held that the petitioner was liable to
pay Rs.5,86,562/-, which is against the
principle of natural justice. While in
service
neither
preliminary
nor
full
fledged departmental enquiry has been
made in the matter. No adverse material
has been brought on record against the
petitioner in his career.
Case Law discussed:
{2015 (2) ADJ 673 (DB)(LB)}; 2015 (3) ADJ
305 (DB); 2009 (2) SLJ 105; (2007) (2) BLJR
2847); Letters Patent Appeal No. 113 of 2012.
(Delivered by Hon'ble Mahesh Chandra
Tripathi, J.)
1. Heard Shri Anil Kumar Bajpay,
learned counsel for the petitioner and Shri
Pankaj Rai, learned Addl. Chief Standing
Counsel for the respondents.
2. By means of the present writ
petition, the petitioner has prayed for
following
reliefs:-
2 All] Madhusudan Agarwal Vs. State of U.P. & Ors.
739
"(i) to issue a writ, order or
direction, in the nature of certiorari,
quashing the impugned order dated
25.7.2007 passed by the Superintending
Engineer, Bulandshahr Circle, Public
Works
Department,
Bulandshahr
(
Annexure-I to the writ petition).
(ii)to issue a writ, order or direction,
in the nature of certiorari, quashing the
information letter dated 20.03.2008 by
which Rs.5,86,562/- has been deducted
from the gratuity and encashment i.e.
Rs.3,02,000/-
from
gratuity
and
Rs.2,36,562/- from encashment and has
been paid vide Cheque No.510698 by the
Executive Engineer, Provincial Division,
Public Works Department, Bulandshahr
(Annexure-IA to the writ petition).
(iii)to issue
a
writ,
order
or
direction, in the nature of mandamus,
directing the respondents to release the
amount to the tune of Rs.5,86,562/- which
was deducted from the gratuity and
encashment as intimated to the petitioner
vide letter dated 20.03.2008 along with
interest @ 12%.
(iv)to issue a writ, order or direction,
in the nature of mandamus, directing the
respondents to also pay temporary
imprest fro a sum of Rs.51,000/- and
Rs.12,621/-.
(v) to award the cost of the petitioner
to the petitioner."
3. Brief facts giving rise to the
present writ petition are that the petitioner
was initially appointed as Overseer in the
year 1970. Later on the said designation
was changed to Junior Engineer. The
career of the petitioner was always
unblemished and nothing adverse except
the present incidence had been brought on
record by the respondents. The petitioner
has attained the age of superannuation on
31.7.2007. Shri Rajendra Prasad Sharma,
who was then posted as Executive
Engineer, Provincial Division, Public
Works Department, Bulandshahar had
issued an order on 2.12.2006 asking the
petitioner to hand over the charge of store
to Shri V.P. Singh-II, Junior Engineer
with immediate effect.
4. Serious allegations have been
levelled by the petitioner against Shri
Rajendra Prasad Sharma, the details of
which have been averred in para 6 of the
writ petition. But at the time of argument
the counsel for the petitioner has not
pressed the relief against the Executive
Engineer.
5. It has also been averred in the writ
petition that Shri Rajendra Prasad Sharma
was transferred on 19.12.2006 and at his
place Shri S.R. Verma was posted as
Executive Engineer since 19.12.2006 to
30.12.2006. Thereafter, in a very short
span many Executive Engineers came on
the said post, the details of which have
been given in para 8 of the writ petition.
Shri Rajendra Prasad Sharma had again
taken over as Executive Engineer at
Bulandshahar and passed a detailed order
on 17.2.2007 appointing two Asstt.
Engineers to assume the charge and by
the same order authorisation of the
petitioner to receive maxphalt (bitumen)
from the Indian Oil Corporation, Mathura
was cancelled on the ground that 2 and 1⁄2
months had elapsed and he failed to hand
over the charge and, therefore, why not
the disciplinary proceedings may be
initiated against the petitioner. It has been
contended that the petitioner on 20.2.2007
had handed over the charge to Shri V.P.
Singh in pursuance to order dated
2.12.2006 along with all details of the
store, but the reason best known to Shri
V.P. Singh, he had not made any
740
 INDIAN LAW REPORTS ALLAHABAD SERIES
endorsement on the charge, the details of
which have been averred in Annexure 4 to
the writ petition.
6. For measurement of the stock
position the Committee was constituted
and as on 23.2.2007 the total stock of
291.883 metric tones were shown in the
measurement book. The Chief Engineer,
Public Works Department vide Office
Memo dated 7th January, 1984 had issued
circular by which it had been indicated
that in case person has been transferred
and is not handing over charge within the
appointed day, then after expiry of three
days the Executive Engineer shall appoint
a committee of two Asstt. Engineers, who
shall be of the same division but shall not
be the Asstt. Engineer, who is holding the
charge of such Junior Engineer. In the
instant case the Asstt. Engineer-I was
holding the charge of store in which the
petitioner along with Shri V.P. Singh
were posted.
7. Learned counsel for the petitioner
submits that in utter disregard to the said
office
memo
Shri
Sharma
has
manoeuvred the things according to his
own in order to get the result as per his
own desire and to falsely implicate the
petitioner.
Learned
counsel
for the
petitioner also submits that in the present
matter on 17.3.2007 Shri V.P. Singh-II,
Junior
Engineer
in
whose
favour
assumption of charge was sought to be
made had issued bitumen to Shri Anil
Kumar twice and continued to release the
stock material to the contractors of the
department, which was not noticed by the
Committee. In pursuance to the letter
dated 15.3.2007 the Committee has
submitted report on 17.2.2007 by which it
had been indicated that 39.64 metric tones
bitumen
was
found
short.
In
this
background Shri Sharma had issued a
letter to the petitioner on 20th March,
2007 by which it had been indicated that
as per the stock register the total bitumen
of department's store should have been
331.323 metric tones, whereas after
physical verification it was only 291.68
metric tones of bitumen, hence there is a
shortfall of 39.64 metric tones and as such
the
petitioner
was
called
for
an
explanation. Immediately in response to
the said show cause notice the petitioner
had responded that he had already given
charge on 20.2.2007 along with stock
position and as such no shortfall was
found at the relevant time. Therefore, he
was not liable for this shortfall. In this
background on 7.6.2007 the petitioner
was served with detailed show cause on
the ground that the petitioner had not
handed over the charge, therefore, the
committee was constituted and after
physical verification it was found that the
bitumen to the tune of 39.64 metric tones
worth Rs.8,49,928/- was found deficient.
In has also been stated under the aforesaid
facts that as to why suitable proceedings
may not be initiated under CCS Rules
against the petitioner. A detailed reply
had been submitted by the petitioner on
20.6.2007 in which the allegations of
malafide have been levelled against the
then Executive Engineer and it is
categorically stated that he had already
handed over the charge on 20.2.2007. A
deliberate attempt had been made by Shri
Sharma so that at the fag end of his
career, his entire service may be ruined
and retiral benefits may be forfeited.
8. Learned counsel for the petitioner
vehemently submits that the track record
of the petitioner was unblemished. All the
allegations were malafide against the
petitioner and serious allegations were
2 All] Madhusudan Agarwal Vs. State of U.P. & Ors.
741
also levelled against Shri Sharma for
illegal demand but the petitioner could not
fulfil the same, therefore, he was falsely
implicated. He has also submitted that in
the present matter no enquiry had been
initiated and in the absence of any regular
enquiry the liability could not be fasten
over the petitioner and as such the amount
could not be realised from the gratuity as
well as from the retiral benefits. He has
also submitted that surprisingly initially
the deficiency of 39.62 metric tones of
bitumen was alleged but subsequently it
had been reduced to 27.343 metric tone
worth Rs.5,86,562/-.
9. Learned counsel for the petitioner
has also apprised to the Court that on
4.6.2007 the bitumen measuring 39.62
metric tone was handed over to Shri V.P.
Singh-II. The same has also been brought
on record as Annexure No.17. In this
regard
the
petitioner
had
also
communicated to the Executive Engineer
that once Shri V.P. Singh-II had already
received the said bitumen on 4.6.2007,
therefore, the show cause notice dated
25.7.2007 was liable to be quashed. He
submits that the illegal deduction of the
amount from the gratuity cannot be
sustained. It is well settled law that the
amount can only be recovered from the
gratuity strictly in accordance with law
and as such no procedure has been
adopted by the department.
10. In support of his submissions,
learned counsel for the petitioner has
placed reliance on a judgment of this
Court in Ghanshyam Das Varshney v.
State of U.P. & Ors. {2015 (2) ADJ 673
(DB) (LB)} in which the Court held that
in the matter of allegations of committing
certain
irregularities
proper
enquiry
should be conducted. Without holding
proper enquiry the punishment cannot be
awarded to the employee. The petitioner
has also placed reliance on a recent
judgment of this Court in Bankey Bihari
Chauhan v. State of U.P. & Ors. reported
in 2015 (3) ADJ 305 (DB) in which a
Division Bench of this Court held that
adjustment of huge amount from gratuity
is not permissible unless the employee is
terminated in view of Section 4 (6) of the
Payment of Gratuity Act, 1972. The Court
has held that recovery from the gratuity
can only be made after fulfilling the
conditions as contained in Section 4 (6) of
the Act. The Court has allowed the appeal
and quashed the recovery order from
gratuity. The recovered payment was
ordered to be paid along with interest as
per sub-section (3A) of Section 7 of the
Act. The relevant portion of the judgment
are quoted as under:-
"Section 4 (6) of the Act provides for
the circumstances in which the gratuity of
an employee, whose services have been
terminated, can be forfeited. Section 4 (6)
is in the following terms:
"4. Payment of gratuity. - (1) ... ...
(6)
Notwithstanding
anything
contained in sub-section (1), -
(a) the gratuity of an employee,
whose services have been terminated for
any act, willful omission or negligence
causing any damage or loss to, or
destruction of, property belonging to the
employer shall be forfeited to the extent
of the damage or loss so caused;
 (b) the gratuity payable to an
employee may be wholly or partially
forfeited, -
(i) if the services of such employee
have been terminated for his riotous or
disorderly conduct or any other act of
violence on his part, or
742
 INDIAN LAW REPORTS ALLAHABAD SERIES
(ii) if the services of such employee
have been terminated for any act which
constitutes an offence involving moral
turpitude, provided that such offence is
committed by him in the course of his
employment."
In the decision of the Supreme Court
in Jaswant Singh Gill Vs Bharat Coking
Coal Limited4, it has been held that
termination of services for any of the
causes enumerated in sub-section (6) of
Section 4 of the Act is imperative before
the gratuity can be forfeited. The same
principle has been followed in a more
recent decision of the Supreme Court in
State of Jharkhand Vs Jitendra Kumar
Srivastava, 2013 (2) ESC 554 (SC).
In the present case, it is not in dispute
that the services of the appellant were never
terminated. The appellant continued to be in
service and retired on attaining the age of
superannuation. In the circumstances, the
basic pre-condition for the forfeiture of
gratuity under Section 4 (6) of the Act was not
fulfilled. We may also note that Regulation 63
of the Regulations provides for penalties and
clause (4) thereof provides for the recovery
from pay or deposit at the credit of an
employee of the whole or part of a pecuniary
loss caused to the Corporation by negligence
or breach of an order. The Regulations must
necessarily be harmonized with the provisions
of the Act and cannot override the express
statutory provision. In any event, it is clear
that even Regulation 63 contains no such
provision of recovery from gratuity. In these
circumstances, we are of the view that the
action for recovery from gratuity was
contrary to law and in the teeth of the express
provision of the Act. The learned Single
Judge, with great respect, was not justified in
dismissing the petition on the ground that the
appellant had not challenged the order of
penalty or the appellate order. For the
purposes of the present proceedings, it is not
necessary for the Court to enquire into the
grievance of the appellant that he was not
served with the appellate order. Moreover, we
may clarify that the learned counsel for the
appellant has only confined himself to the
payment of gratuity. Even if the order of
penalty has attained finality, as is urged on
behalf of the employer, any recovery or
adjustment of the amount of gratuity has to be
made by following the statutory provisions
contained in the Act. Since the conditions set
out in Section 4 (6) of the Act for forfeiture of
the gratuity have not been fulfilled, the action
of the employer was ultra vires."
11.
Per contra learned Addl. Chief
Standing
Counsel
submitted
that
the
petitioner was incharge of the departmental
godown and later on it was found that
bitumen measuring 27.34 metric tone was
deficient in the record and only after physical
verification the loss of Rs.5,86,562/- was
recovered from the petitioner. He has also
submitted that vide order dated 12.12.2006
there was clear cut direction to the petitioner
to hand over the charge to Shri V.P. Singh of
the store-godown but the petitioner had not
followed the direction issued by the superiors
and as such he was responsible for the
shortfall of the bitumen. He further submitted
that in the present matter on account of this
mess a committee of two Assistant Engineers
was constituted on 17.2.2007 and in their
presence the measurement had been made
and as such 291.683 metric tone bitumen
were verified in the godown. Even at the
time of verification the petitioner was very
much present and also made endorsement
over the said verification. Therefore, at this
belated stage a plea cannot be taken by the
petitioner that such verification had not taken
place in his presence. Thus, the writ petition
is liable to be dismissed on the ground that
admittedly the department had sufferred loss,
2 All] Madhusudan Agarwal Vs. State of U.P. & Ors.
743
which was liable to be recovered from the
retiral benefits of the petitioner.
12. Heard rival submission and
perused the record.
13.
In the present matter the detailed
show cause was given on 20.3.2007 by which
it had been indicated that after verification it
had been found that 39.64 metric tone of
bitumen was fallen short in the godown.
While issuing the impugned show cause
notice the Executive Engineer observed that
the matter was serious in nature. The
petitioner was asked to submit his reply within
three days' time otherwise the matter would be
referred to the higher authorities for
departmental enquiry. In response to the show
cause
the
petitioner
had
responded
immediately
with
details
refuting
the
allegations and with categorical averment that
at the time of handing over the charge there
was no shortfall. Even Shri V.P. Singh, who
has taken over the charge from the petitioner
had also acknowledged the receiving of 39.62
metric tone of bitumen on 4.6.2007, which
has also been brought on record as Annexure
17 to the writ petition. But it is surprised to
note that merely on the basis of show cause
notice and in the absence of any departmental
enquiry how the department had reached to
the conclusion that it had sufferred financial
loss. Even the department had not shown any
details regarding any full fledged enquiry in
the matter or it had tried to ascertain the
correct position from the godown. At one
place the loss of 39.62 metric tone bitumen
was found, whereas in the same letter the
department came to the conclusion that only
loss of 27.343 metric tone bitumen was
occurred amounting to Rs.5,86,562/-. It is
relevant to indicate that while passing the
impugned
order
dated
25.7.2007
the
Executive
Engineer,
Bulandshahar
had
observed as under:-
"vf/k'kklh vfHk;Urk izk0[k0] cqyUn'kgj us vius
i=kad 2406@2, ctV] fnukad 24-7-07 }kjk vf/k'kklh
vfHk;Urk] fu0 [k0&2] cqyUn'kgj ds mijksDr i= o
voj vfHk;Urk ds izR;kosnu dks lek;ksftr djrs gq,
Jh e/kqlwnu voj vfHk;Urk ds fo:) 27-343 esS0Vu
fcVqfeu dh deh] ftldh ykxr :0 586562-00 vkrh
gS] dh 'kkldh; gkfu ds fy;s Jh e/kqlwnu voj
vfHk;Urk dks nks"kh Bgjk;k gSA vr% Jh e/kqlwnu voj
vfHk;Urk] izk0[k0] yks0fu0fo] cqyUn'kgj ls 'kkldh;
gkfu :0586562-00 ek= dh olwyh fd;s tkus ds
vkns'k ikfjr fd;s tkrs gaSA vf/k'kklh vfHk;Urk
izk0[k0yks0fu0fo0] cqyUn'kgj ;g lqfuf'pr gks ysa fd
izR;sd n'kk esa mDr /kujkf'k dh olwyh Jh e/kqlwnu
voj vfHk;Urk ds osru] xzsP;qVh vkfn ns;ksa ds Hkqxrku
ls iwoZ dj ysaA ;fn voj vfHk;Urk ds mDr ns;ksa ls
okafNr /kujkf'k dh olwyh iwjh ugh gksrh gS rks okafNr
/kujkf'k dh owlyh Jh e/kqlwnu voj vfHk;Urk dh
py&vpy lEifRr ls fd;s tkus gsrq lEcaf/kr
ftykf/kdkjh ds ek/;e ls dk;Zokgh gh tk;sA"
14.
It is admitted case that in the
present matter no departmental enquiry has
taken place. Only on the basis of show cause
the department had proceeded into the matter
and took final decision and held that the
petitioner was liable to pay Rs.5,86,562/-,
which is against the principle of natural
justice. While in service neither preliminary
nor full fledged departmental enquiry has
been made in the matter. No adverse material
has been brought on record against the
petitioner in his career.
15. The judgments cited by learned
counsel for the petitioner fully support his
case. It is not in dispute that services of
the petitioner were never terminated. The
petitioner continued to be in service and
retired
on
attaining
the
age
of
superannuation. In the circumstances, the
basic pre-condition for the forfeiture of
gratuity under Section 4 (6) of the
Gratuity Act, 1972 was also not fulfilled.
16. It has also been held time and
again that the retiral benefits like pension,
744
 INDIAN LAW REPORTS ALLAHABAD SERIES
gratuity or leave encashment are not
bounty or grace but are earned by the
employee through the years of service of
a company. They are an employee's
security after retirement.
17. In Dr. Dudh Nath Pandey v. The
State of Jharkhand & Ors., 2009 (2) SLJ 105
(Jharkhand),
the
Division
Bench
of
Jharkhand High Court after scanning various
case laws on the subject held that the
conditions precedent for imposing penalty of
withholding pension is that there should be a
finding in departmental enquiry or judicial
proceeding that the pensioner committed
grave misconduct in the discharge of his duty
while in office. The Court held that leave
encashment also cannot be withheld since
that is paid in lieu of unutilized leave as it
partakes the character of salary.
18. In Dr. Dudh Nath Pandey v. The
State of Jharkhand (2007 (2) BLJR 2847),
the Full Bench of Jharkhand High Court has
held that there is no power for the
Government to withhold Gratuity and
Pension during the pendency of the
departmental
proceeding
or
criminal
proceeding. There is no power with the
government to withhold Leave Encashment
at any stage either prior to the proceeding or
after conclusion of the proceeding.
19. In the matter of leave encashment
the Full Bench of Punjab and Haryana High
Court in Punjab State Civil Supplies
Corporation Ltd. & Ors. v. Pyare Lal (Letters
Patent Appeal No.113 of 2012) has held that
the amount of leave encashment is payable to
the retiring employee notwithstanding the
pendency of the departmental enquiry or
criminal proceedings.
20. In the present matter, leave the
question of finding, even the proper
enquiry was not conducted. Only on the
basis of show cause the amount has been
withheld from the encashment without
giving any opportunity to the petitioner,
which is against the principle of natural
justice.
21.
In view of the above, the order
impugned dated 25.07.2007 cannot be
sustained and is hereby set aside. The writ
petition is allowed. The petitioner will be
entitled for all the retiral benefits, which is
due to him. The recovered amount shall be
paid to the petitioner alongwith 9% interest
calculated from the date, when it is payable
till the date of its actual payment. The same
shall be given to the petitioner within a
period of three months from the date a
certified copy of this order is produced
before the authority concerned.
--------
ORIGINAL JURISDICTION
CIVIL SIDE
DATED: ALLAHABAD 16.04.2015
BEFORE
THE HON'BLE PRADEEP KUMAR SINGH
BAGHEL, J.
C.M.W.P. No. 36320 of 2009
Smt. Vimla Devi Sharma
 ...Petitioner
Versus
State of U.P. & Ors.
...Respondents
Counsel for the Petitioner:
Sri Ashok Khare, Sri Siddharth Khare
Counsel for the Respondents:
C.S.C.
Uttar Pradesh State Aided Educational
Institute
Employees
Contribution
Rules
1964-Rule-18-Qualifying period of service
for pension-petitioner working assistant
teacher in primary section attached to
intermediate college-taken grant in aid
01.10.89-retired
on
30.06.2001-denied