The Management of Kirloskar Electric Company Limited vs Sunil

Anand Byrareddy, J.—These petitions are heard and disposed of by this common order.

The writ petition in WP 63391/2009 is filed by the Management-employer of the respondent and the writ petition in WP 61155/2010 is filed by the workman.

Heard the learned counsel for the parties.

In the writ petition of the employer, it is contended that the petitioner was a Company incorporated under the Companies Act, 1956, and having its unit at Gokul Road, Hubli. The respondent was initially appointed as a Stipendiary Trainee in the year 1980 and was later taken on regular basis as a Clerk in the year 1984. He had remained absent during the year 1989 for 15 days and therefore, invoking Clause 13(d) of the Standing Orders, the Management had informed the respondent by a letter dated 29.04.1989 that he had lost his lien on his employment. This action of the Management was challenged by the respondent-workman by raising a dispute under Section 10(4-A) of the Industrial Disputes Act, 1947, (hereinafter referred to as ''the Act'' for brevity), which was registered as case KID No. 185/1989 on the file of the Labour Court, Hubli. The Labour Court ultimately passed an award as on 29.01.1999 allowing the petition and directing reinstatement of the respondent together with continuity of service and other consequential benefits. As regards backwages, the Labour Court had directed payment of 50% of the backwages to be calculated on the basis of the last drawn pay.

Being aggrieved by the said award, the Management had preferred a writ petition before this Court in WP 24375/1999. That petition was dismissed by an order dated 20.07.1999. An appeal having been filed before a Division Bench in Writ Appeal No. 6126/1999, the appeal was dismissed by an order dated 14.12.2000. During the pendency of the proceedings, as aforesaid, the petitioner had paid a total sum of Rs. 34,361/- towards wages under Section 17-B of the Act. The respondent was ultimately reinstated into service on 01.3.2001. A sum of Rs. 2,13,957/- was said to have been paid by the petitioner to the respondent towards monetary benefits payable, in terms of the award aforesaid after deducting provident fund and professional tax as also the amount paid under Section 17-B of the Act. The respondent, however, had filed an application under Section 33C(2) of the Act claiming a sum of Rs. 6,16,569/- under various heads namely backwages, bonus, medical reimbursement, ex-gratia, uniform, washing allowance, earned leave encashment, incentive, house rent, leave travel allowance, educational allowance, conveyance allowance etc., That application having been registered by the Labour Court, was contested by the petitioner and evidence was tendered by the parties on the basis of which the Labour Court had passed an order directing the petitioner to pay a sum of Rs. 2,14,230/- with costs and interest at 10% per annum in case of default and the amount was to be paid within 60 days. It is aggrieved by the same, that the first of these petitions, is filed.

Insofar as the petition filed by the workman in WP 61155/2010, it is claimed that the Labour Court had rejected the amount claimed towards various other heads such as medical benefits, ex-gratia payment, uniform, shoes, washing allowance, leave encashment, incentives, leave travel concession, education allowance, conveyance allowance and therefore had sought direction to pay a sum of Rs. 4,02,339/- with interest at 12% p.a.

Therefore, the point that arise for consideration is as to ''what is the entitlement of the petitioner-workman in terms of the award and the effect of the pendency of the proceedings by way of writ petition and writ appeal before this Court in the Management having challenged the award?

According to the Management, the petitioner was entitled to 50% of the backwages from 29.04.1989 namely date of the date of termination to 29.01.1999 that is the date of the award which is for 117 months at the rate of Rs. 1,792/- which was the last drawn pay of the respondent-workman which would amount to Rs. 1,04,832/- being 50% of Rs. 2,09,664/- and the workman would also be entitled to full backwages from 30.01.1999 to 28.02.2001, namely, from the date of award till the date of actual reinstatement being Rs. 1,42,599/- and therefore, a total sum of Rs. 2,47,431/- was due to be paid to the workman after deduction of Rs. 34,361/- which is the amount paid as wages under Section 17-B of the Act during the pendency of the writ proceedings and the deduction towards provident fund in a sum of Rs. 29,692/- at 12% per annum on Rs. 2,47,431/- and professional tax of Rs. 5,645/-. The total amount payable after deduction was Rs. 1,77,733/- which amount has been paid in full and final settlement, in favour of the respondent-workman. Therefore, the Labour Court having adjudicated the application under Section 33(C)2 of the Act and having directed payment of Rs. 2,14,230/- on a mechanical acceptance of the amounts indicated by the workman, which is, again extracted at page 31 of the petition filed by the Management. It is pointed out that the calculation of 50% backwages made by the workman is with reference to the various revisions that have taken place from the date of his termination till the date of the award and it is on this basis that he has arrived at a total sum of Rs. 4,24,620 as the wages payable for the entire period and 50% of which was Rs. 2,12,310/-. It is also pointed out that though the workman has claimed full backwages from the date of award to the date of joining in March, 2001 at Rs. 1,34,377, the Management has actually shown that it is less and it has offered to pay him Rs. 1,42,599/-. Therefore, the Labour Court was incorrect in directing the payment of amounts as claimed by the workman and the amount that is paid by the petitioner-Management is in accordance with law and therefore seeks modification of the order passed by the Labour Court in directing the payment as aforesaid.

While the learned counsel for the workman as also the petitioner in the connected petition would contend that, it would be unfair to deny the wage revisions that have taken place from time to time. The starting point of calculating the backwages would be from with reference to the last drawn pay as on the date of the order of termination and it would be unjust to deny the wage revised from time to time and therefore the Management offering to pay a flat rate of backwages on the basis that the last pay drawn was Rs. 1,792/- whereas there would have been innumerable wage revisions from time to time and if the same is denied, it would be unjust and unfair to the workman and the denial of other benefits, as well, would also result in miscarriage of justice and unfair to the workman. The learned counsel places reliance on a judgment of the Supreme Court in the case of Andhra Pradesh State Road Transport Corporation Vs. B. Vikram Reddy, (2004 (2) LLJ 1051) to contend that, if, the workman was required to be reinstated in terms of the award and the Management not having done so and having unsuccessfully challenged the award by way of writ proceedings which ultimately resulted in dismissal of the writ appeal preferred against the order of the learned Single Judge rejecting the petition, the workman would be entitled to full backwages for the entire period as well as other benefits that are claimed.

The learned counsel Sri Sawkar, insofar as, the claim of the workman for all the allowances and other benefits that are claimed, would draw the attention of this Court to a decision of this Court of a learned Single Judge in K.R. Tyagi Vs. National Textile Corporation Ltd. and another, wherein in a similar situation where a workman was claiming all such benefits as claimed in the present case on hand, this court relying on the decision in Dilbagh Rai Jerry Vs. Union of India (1974) 45 FJR 1 (SC) wherein there was a claim by a railway employee for running allowance payable to a dismissed employee who was later reinstated, it was observed that running allowance was a part of the substantive wages and applying the same token of reasoning in Tyagi''s case, this Court has held as follows:

"Now the question that requires to be considered is whether the employee, apart from backwages is entitled for any other monetary benefits, in the present case earned leave salary, leave travel concession, medical reimbursement and annual increments. It is the contention of learned counsel for petitioner that when the workman is reinstated with backwages, then the period of forced unemployment is equated with period on duty and, therefore earned leave should be paid to him. Per contra, learned counsel for respondents submits that for entitlement of this monetary benefit, the employee should earn leave while he is working in the company. For that purpose relies upon the Rules of the Company which has come into force with effect from January 1, 1976. The rules are titled as "National Textile Corporation (Andhra Pradesh, Karnataka, Kerala and Mahe) Limited Leave Rules, 1976. In the said Rules, the expression "Earned Leave" is defined to mean "Leave earned in respect of periods of service with the Corporation and granted on full pay". This leave can be earned in respect of the periods of actual service in the Corporation. Even though the petitioner was not in service of the respondent-Company during the disputed period, he cannot be deemed to be in service either by creating a legal fiction or by a notional presumption. The details and the procedure for earning leave is prescribed under Clauses-6 and 7 of the leave rules. The said clauses of the leave rules give a clear indication that the leave has to be earned and it cannot be granted by default or when the employee is not on duty. It is like earning interest on the money deposited in a financial institution. For every 12 days of working, one day''s earned leave will be credited to employee''s leave account and 2 1/2 days for each completed month of service. If an employee does not work, he would not be entitled to any earned leave, since it is only earned leave is encashable and not any other leave such as commuted leave, half pay leave, casual leave etc. Earned leave account is maintained in two parts - (a) encashable and (b) non-encashable. Any part or whole of encashable leave can be availed as leave and it is not necessary that it should be encashed. The quantum of earned leave is limited to a maximum of 75% earned leave admissible during a calendar year subject to a maximum of 23 days and the balance is credited to non-encashable earned leave account. The amount payable towards encashment of leave will not be reckoned as salary for the purpose of overtime, bonus, gratuity, etc. A conjoint reading of clauses-6 and 7 of the Leave Rules, leaves no manner of doubt that this leave has to be earned while in service and not while out of service. If the workman/employee did not perform any work during the period of termination, it is not open to him to demand leave with wages or compensation in lieu thereof. In my view, this claim cannot be treated as either legal or valid, since the earned leave cannot have been earned as a matter of right, but only by actual working.

Now coming to the claim for leave travel concession, it is governed by National Textile Corporation (Andhra Pradesh, Karnataka, Kerala and Mahe) Limited, Travelling Allowance Rules, 1975. In the said Rules, ''Leave Travel Concession (LTC) is defined to mean,'' ''a concession given to an employee for visiting his home town or any other place in India''. This facility will be admissible to employees and members of their families. An employee will be entitled to claim full reimbursement of actual cost of travel as per the entitlement rules. This gives a clear indication that the employee should actually travel to claim leave travel concession. If he does not travel, he cannot encash leave travel concession. Since petitioner was out of employment, the question of himself and his family members undertaking travel and incurring actual cost of travel would not arise. Once again question of deeming that, if the employer had not prevented the employee, in the present case the petitioner, he would have travelled and he would have incurred expenses cannot be imported into the language employed in the Rules and in my view this claim of the petitioner is also unsustainable in law and in the face of unambiguous language employed in the Rules.

The third claim of the petitioner is in respect of medical reimbursement and this claim has also been rejected by the company solely relying upon Employees Medical Rules, 1978. Medical reimbursement once again depends on the actual medical expenses incurred by the employee concerned. Again there is nothing like a notional expenditure for a notional illness when the employee concerned was out of employment in view of the termination order. In my view since the reimbursement is only on actual expense, while in service, the petitioner''s claim in my view is highly imaginary and wholly unjustified.

Ultimately, even though the petitioner has claimed for the benefit of annual increments, his learned counsel did not make any submission on that aspect of the matter since the petitioner had reached the top scale of pay in which he was. In that view of the matter, I need not consider that claim of the petitioner.

In my view the earned leave salary, leave travel concession and medical reimbursement are not part of wages, but which are more or less in the nature of night shift allowance and running allowance which were considered by Apex Court in the case of Bharat Electronics Ltd. (1990 (76) FJR 300) and in Dilbagh Rai Jerry''s case, (1974 (45) FJR 1). In that view of the matter, it cannot be said that the earned leave salary, LTC and medical reimbursement were due to the petitioner as part of his wages for the entire period when he was prevented from performing his duties in the respondent-company."

The learned counsel for the Management, hence would submit that the effect of order of stay granted by this Court keeps the award in abeyance, in any event, the full backwages have been paid for the period from the date of award till the date of actual reinstatement and it cannot be said that the workman would be entitled to all the other benefits that are claimed in view of the law laid down by this Court which has been affirmed by a division bench of this Court.

Given the above rival contentions, from a reading of the award which is now made available to the Court, the Labour Court has expressed that the workman would be entitled to 50% of his backwages on the basis of his last drawn pay which was Rs. 1,792/-. Therefore, as contended by the learned counsel appearing for the workman, it cannot be said that the revision in wage from time to time should also be applied in arriving at the total amount of backwages to be paid till the date of reinstatement. This would lead to supplying words which are not to be found in the award. There is no such intention expressed as to the calculation of backwages being made with reference to the revisions as well. It is on a flat rate of Rs. 1,792/- per month which has to be calculated as the backwages and therefore the calculation made by the Management upto the date of award, is in order and the Labour Court having adopted the amount indicated by the workman is with reference to revisions which were impermissible.

Insofar as the full backwages payable from the date of award till the date of reinstatement, it is noticed that the workman has actually shown a lesser amount to what he was due and the Management in all its fairness has indicated and has paid more than what he has claimed. Therefore, on account of that, workman cannot be said aggrieved. Insofar as the reliance placed on Andhra Pradesh State Road Transport Corporation Vs. B. Vikram Reddy, by the learned counsel for the workman, cannot be said to apply to the present case on hand. In that case, the respondent was a conductor who was removed from service and thereafter he having challenged the same, was directed to be reinstated into service by the Labour Court. The employer had not sought to challenge the said award. The workman, however, had in view of the fact that he had been denied the backwages had challenged it in a writ petition and the learned Single Judge of the High Court had directed 50% to be paid, which was again challenged by the Management by way of writ appeal and the writ appeal having been dismissed, Special Leave Petition was filed before the Supreme Court which was ultimately dismissed and the Supreme Court having held that since the employer had not sought to challenge the award, it would be liable to pay full backwages from the date of award till the date of reinstatement, is a situation which is not akin to the present case on hand, because the employer in this case had challenged the award in the first instance and there being an order of stay, was not obliged to immediately reinstate the petitioner and had the benefit of the order of stay.

Hence, the question of paying the allowances and other benefits which are claimed by the workman would not arise in view of the law already laid down by this Court in Tyagi''s case and it is only, if, the workman had actually worked for the employer during the relevant period that he would have been entitled to all such benefits as claimed by him, for otherwise, he is not entitled to claim a sum by a deeming fiction, as he would not have travelled to claim leave travel allowance nor could he claim medical allowance on the basis that he had fallen ill, from time to time and any benefit without correspondingly providing his services to the employer. Though, he might have been ready and willing to discharge duty, the fact that the Management was reluctant to take him back to service and had challenged the award of the Labour Court in an appropriate proceedings before this Court, would not entitle the workman to such benefits. Consequently, the order of the Labour Court stands modified. The writ petition of the employer in WP 63391/2009 is allowed and the amount paid by the employer in a sum of Rs. 1,77,733/- is demonstrated to be the correct amount to which the workman was entitled in terms of the award. The writ petition filed by the workman in WP 61155/2010 is hereby dismissed.

In fact, the workman has received a total sum of Rs. 2,13,960/- which includes bonus as well. Though the employer appears to have paid excess amount, it is not open for the employer to recover the same, as it is paid out of its own volition.