Dismissal from Service Automatically Forfeits Leave Benefits; No Express Denial Required: Gauhati HC
Gauhati High Court: A Division Bench of Chief Justice Justice & Justice N. Unni Krishnan Nair of the Gauhati High Court overturned the Central Administrative Tribunal's order directing Railways to release leave encashment benefits to a dismissed employee. The Court held that dismissal from service automatically results in forfeiture of past service under Rule 40 of Railway Services (Pension) Rules, 1993, which consequently leads to forfeiture of all accumulated leave under Rule 504 of IREC. The Court clarified that there is no requirement for explicit denial of leave encashment in the dismissal order as it is an automatic consequence of dismissal.
Background
The case originated from a disciplinary proceeding against Utpal Datta Talukdar, which resulted in his dismissal from service without compassionate allowance (pension and gratuity). After unsuccessful appeals and revision petitions, Talukdar approached the Central Administrative Tribunal (CAT), Guwahati Bench, seeking release of his Provident Fund dues, Group Insurance Scheme benefits, and Leave Encashment. The CAT, through its order, directed the Railways to release his Leave Encashment benefits. The Union of India challenged this order before the High Court.
Arguments
The Union of India relied on Rule 504 of IREC, which explicitly states that any claim to leave credits ceases from the date of dismissal, removal, or resignation of a Railway servant. It argued that the Tribunal erred in concluding that Rule 504 had no relevance to leave encashment claims.
On the other end, the respondents based their arguments on Rule 542(2)(b) of IREC, which requires authorities to credit earned leave at 2½ days per completed calendar month up to the month preceding dismissal. They contended this indicated dismissed employees' right to leave encashment. They also cited Rule 550(B)(1)(ii) of IREC, which deals with cash payment in lieu of leave in various situations. Furthermore, they argued that since the dismissal order only explicitly withheld pension and gratuity without mentioning leave encashment, the benefit could not be denied.
Court's Reasoning
Firstly, examining Rule 504 of IREC alongside Rule 40 of Railway Services (Pension) Rules, 1993 (which mandates that dismissal leads to forfeiture of past service), the court established a direct connection between service forfeiture and leave forfeiture. Since leave is earned through service, the court held that forfeiture of past service necessarily results in the forfeiture of accumulated leave.
Secondly, the court addressed Rule 542(2)(b), clarifying that it merely prescribes the method of computing earned leave and doesn't create an entitlement to leave encashment for dismissed employees. Similarly, Rule 550(B)(1)(ii) was found inapplicable as it was not meant for regular employees like the respondent.
Thirdly, the court found that the CAT fundamentally erred in holding that Rule 504 had no relevance to leave encashment. The court emphasised that the express text of the provisions implies the contrary, and any interpretation divorcing Rule 504 from leave encashment is untenable.
Fourthly, the court rejected the argument that leave encashment denial needed explicit mention in the dismissal order. It held that such denial is an automatic consequence of dismissal, flowing from the forfeiture of past service, and therefore doesn't require specific mention. The court clarified that the disciplinary authority is not required to make any such observation while dismissing a Railway servant. Consequently, the court allowed the petition and set aside the CAT's order.
Decided on: 06-11-2024
Neutral Citation: 2024:GAU-AS:11018-DB (The Union of India & Ors. v. Utpal Datta Talukdar)
Counsel for the Petitioner: Ms. B. Sarma
Counsel for the Respondent: Dr. G.J. Sharma