Punjab & Haryana Court Pulls Up State Federation For Compelling Employee To Withdraw Litigation, Forgo Interest For Release Of Retiral Benefits

The Punjab and Haryana High Court has made it clear that compelling employees to furnish undertaking on affidavit that they will withdraw the cases from the Court "has got no significance in law" and against the the spirit of the basic scheme of the Constitution of India.

Justice Jasgurpreet Singh Puri said, "Such kind of affidavits have no force of law and they are non-est and cannot be enforced. Such practice of seeking affidavits from the employees for giving the retiral benefits is highly deprecated. It is against the spirit of the basic scheme of the Constitution of India."

While objecting to the conduct of Haryana State Co-operative Supply and Marketing Federation Limited (HAFED) wherein it compelled an employee to furnish on affidavit that he will withdraw the proceeding against the department and will not claim interest for delay in releasing the gratuity amount, the Court imposed a cost of Rs.50,000.

Justice Puri was hearing the plea under Articles 226/227 of the Constitution seeking direction to the HAFED to release gratuity, leave encashment and security amounting to Rs.2,22,000/- to the petitioner alongwith interest from the due date till its payment.

It was submitted that the petitioner was working as a Store Keeper in HAFED and he was compulsorily retired from the service in 2005. After the retirement of the petitioner, his entire retiral benefits i.e. gratuity and leave encashment were not paid to him and were adjusted towards an amount of Rs.16,32,881.24 which was stated to be a recoverable amount from the petitioner and it was also decided that surcharge proceedings will be initiated against the petitioner, the plea added.

Thereafter the department filed surcharge proceedings under Section 101 of the Haryana Cooperative Societies Act 1984 against the petitioner to recover an amount of Rs.4,97,013/-

He further submitted that prior to his retirement, there was a punishment order against him on the basis of which a recovery was to be made for an amount of about thirteen lakhs. However,  the surcharge proceedings were dismissed by the Registrar Cooperative Societies Haryana in 2022 and consequent upon the same, the department itself took a decision to waive off the entire amount of Rs.13,93,463.13, which was the surcharge amount claimed.

In this way the entire recovery which was required to be made from the petitioner Rs.13,93,463.13, was waived off by the department because the surcharge proceedings were dismissed by Registrar Cooperative Societies.

It was further submitted that the petitioner retired in the year 2005 and the aforesaid amount has been paid in the year 2023 and as such the petitioner is entitled for the grant of interest because the delay was not on the part of the petitioner and the aforesaid amount was wrongfully with-held by the respondents-HAFED.

Considering the submissions, the Court noted that, "it is very clear that with-holding of the gratuity and leave encashment and other security amount etc. was not because of the fault of the petitioner and it was only because of the surcharge proceedings which were initiated against the petitioner after his retirement which ultimately was dismissed although on the ground of limitation and therefore the petitioner is certainly entitled for the interest on all the delayed payments of retiral benefits."

Justice Puri highlighted that the department are relying upon an affidavit furnished by the petitioner along with an application in 2023 by stating that he undertakes that he will not claim interest and will withdraw the present writ petition and consequent upon the same after two months."Such kind of affidavit has got no significance in law.," said the Court.

It noted that during the course of arguments the counsel for the petitioner has specifically pleaded that it was because of pressure that was imposed upon him for the release of the aforesaid amount i.e. Gratuity, leave encashment etc. that such affidavit was given. 

The Court said since the department specifically relied upon the department for seeking denial of the interest to the petitioner and therefore it can be safely inferred that it was only because of the pressure imposed upon the petitioner.

Consequently, the Court directed that, "From henceforth no such kind of affidavits whereby the employees are compelled to furnish such kind of undertaking that they will withdraw the cases from the Court and will not claim interest will be taken by the respondent-department. In case any such affidavit is again taken by the department from any employee then it shall be considered to be contempt of Court."

It also directed to release the interest @ 6% per annum on the amount of Rs.2,21,598/- from the date of its actual accrual after the retirement till its disbursement within a period of three months from today.

In case the interest on the aforesaid amount is not released within the aforesaid stipulated time frame then the petitioner shall be entitled for future rate of interest @9% per annum, the Court added.

While disposing of the plea, the Court said that the petitioner is entitled for a cost of Rs.50,000 and which shall be paid to the petitioner by the respondents-HAFED within the aforesaid period of three months.

Vivek Aggarwal, Advocate for the petitioner. Ms. Dimple Jain, DAG, Haryana.

Anil Chawla, Advocate for respondents No.3 and 4.

Citation: 2024 LiveLaw (PH) 55

Title: Banarsi Dass v. State of Haryana anda others

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