Bombay High Court: In the present case, the question was whether the petitioners had lost their right to encash privilege leave because they resigned from the services of the respondent-Vidharbha Konkan Gramin Bank (‘the Bank’). The Division Bench of Nitin Jamdar* and M.M. Sathaye, JJ., opined that any attempt to deprive an employee of pension, gratuity, or leave encashment without a statutory provision, is untenable. Thus, the Court held that the petitioner’s accrued right of encashment of privilege leave could not be rejected by the Bank and therefore, directed the Bank to pay the amount of leave encashment to the petitioners along with interest at 6% per annum.
Background
Petitioners 1 and 2 were assistant manager and cashier, respectively in the Bank and they resigned on 02-08-2015 and 01-10-2014, respectively. Their resignations were accepted, and the Bank issued an experience certificate to them certifying that the period they worked with the Bank was satisfactory. The petitioners served the bank for more than 30 years and in that time had accumulated entitlement for encashment of 240 days of privilege leave and 210 days of privilege leave, respectively.
After tendering resignations, the petitioners requested the Bank for encashment of their privilege leave. The Bank informed the petitioners that the facility for encashment of privilege leave for those who have resigned came into existence on 14-09-2015, i.e., after the petitioners had resigned from service therefore, they were not eligible. Aggrieved by this refusal, the petitioners sought a Writ of Mandamus to direct the Bank to pay the amounts of privilege leave standing to their credit, amounting to Rs.6,57,554 for Petitioner 1 and Rs.4,66,830 for Petitioner 2 with interest at 8% per annum.
Analysis, Law, and Decision
The Court analyzed Regulations 61 and 67 of Chapter-VI of the Vidharbha Konkan Gramin Bank (Officers and Employees) Service Regulations, 2013 wherein it is stated that an employee earns one day of privilege leave for every 11 days of duty, with the entitlement being the accumulated days earned and that employees are entitled to full emoluments if they have fulfilled the prescribed duty period. Consequently, the Court stated that the right to leave is a statutory entitlement granted to employees as per the provisions of the law.
The Court also held that a leave encashment is akin to a salary, which is a property. Depriving a person of his property without any valid statutory provision would violate Article 300-A of the Constitution. If an employee has chosen to accumulate his earned leave to his credit, then encashment becomes his right. The Court relied on State of Jharkhand v. Jitendra Kumar Srivastava, (2013) 12 SCC 210, wherein the Supreme Court emphasised that the right to property cannot be infringed upon without due process of law, which is the constitutional mandate enshrined in Article 300-A of the Constitution. The Court also relied on Karnataka Vikas Grameena Bank v. Chandrashekhar, 2021 SCC OnLine Kar 15842, wherein the issue of encashment of privilege leave in the case of a resignation was considered and it was held that there was no distinction between the one who retired and the one who resigned since the benefit had already accrued.
The Court opined that any attempt to deprive an employee of pension, gratuity, or leave encashment without a statutory provision, is untenable and stated that leave encashment which was acquired by the petitioners constituted their property once earned. Deprivation of such property without statutory backing will not be permitted.
The Court also noted that as there is no such specific regulation that takes away the accrued right to encash privilege leave on resignation, then without there being any specific regulation, the right already accrued cannot be forfeited. The Court stated that though Regulation 67 states that all leave shall lapse, it does not mean that the right already accrued for encashment will also lapse.
The Court thus held that the petitioners are entitled to succeed as the right of encashment could not have been rejected by the Bank. The Bank was thus directed to calculate the amount payable to the petitioners along with interest at 6% per annum and pay the same within six weeks from the date of the present order.
[Dattaram Atmaram Sawant v. Vidharbha Konkan Gramin Bank, 2024 SCC OnLine Bom 1253, decided on 02-05-2024]
*Judgment authored by: Justice Nitin Jamdar
Advocates who appeared in this case :
For the Petitioners: Advocate Shailendra S. Kanetkar and Advocate Yash Dhawal.
For the Respondent: Advocate Bhavesh Wadhwani and Advocate Shrishti Shetty i/b. M.V. Kini and Co.
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