Leave Encashment Not Discretionary Bounties But Legal Rights Enforceable Under Constitution: Karnataka High Court

Background Facts

H Channaiah (Petitioner) worked as a waterman in the office of Panchayath Development Officer (Respondent) from 1979 till his superannuation in 2013. Upon retirement of the Petitioner, the Office of Accountant General prepared a detailed statement with the Petitioner's service data and his payable pension. Further there were directives issued by the CEO of Zilla Panchayath and the Taluka Executive Officer of Pavagada Taluka Panchayath which emphasized the urgency of settling the Petitioner's earned leave encashment. However, even after the clear directives, only a portion of the earned leave was released in favour of the Petitioner. Thus, the writ petition was filed for directions to the Respondent to release arrears in encashment of earned leave along with interest.

It was contended by the Respondent that there was a dispute regarding the employment status of the Petitioner. The Petitioner was merely a temporary employee and there were also doubts regarding the documents furnished by the Petitioner as the records of the Assistant Controller State Accounts did not corroborate the Petitioner's initial appointment with the Grama Panchayath.

Findings of the Court

The court observed that the arguments of the Respondent were devoid any merits as the Petitioner's service records, which spans over several years and across different administrative units, unequivocally establishes his continuous employment. His employment is further corroborated by the pensionary benefits extended to the Petitioner by the Grama Panchayath upon his superannuation.

The court placed reliance on the case of Deokinandan Prasad v. State of Bihar wherein it was held by the Supreme Court that pension and gratuity are not merely gratuitous payments subject to the discretionary will of the employer. These benefits are legal rights accruing to the employee upon retirement and they are not contingent upon the employer's discretion or designation.

The court further held that if we build upon the foundation laid in the Deokinandan Prasad case, it becomes clear that entitlements to pension, health gratuity, and leave encashment are integral parts of Fundamental Rights under Article 19(1)(f) and Article 31(1) of the Constitution of India. They safeguard the economic and personal liberties of an individual and ensure that the individual is not deprived of their rightful entitlements without due process of law.

The Court further held that principle of administrative instructions cannot supersede constitutional protections guaranteed to citizens. Article 300A of the Constitution mandates that the state cannot deprive an individual of their property, which includes entitlements like leave encashment, without the authority of law. Thus, an attempt to withhold these entitlements based on administrative directives would be unconstitutional.

The Court thus held that

“Leave encashment cannot be viewed as discretionary bounties but as legal rights enforceable under the Constitution of India”

With the aforesaid observations, the court allowed the writ petition.

Case No.- WRIT PETITION NO.5016 OF 2024 (S-R)

Date of Order- 25^th April 2024

Case Name- H Channaiah Vs Chief Executive Officer, Zilla Panchayath And Ors

Counsel for Petitioners- SRI. BABU RAO .M

Counsel for Respondents- SRI. A. NAGARAJAPPA, AGA

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