Depriving An Employee Of Leave Encashment Which Is Akin To Salary And Is Thus A Property Violates His Constitutional Right: Gujarat HC

Dismissing Ahmedabad Municipal Corporation's plea against a labour court order directing it to pay arrears of leave encashment to a retired employee, the Gujarat High Court underscored that depriving a person of leave encashment–which is akin to salary and is thus a property, violates his statutory rights in the Constitution of India. Justice MK Thakker in her December 24 order said, "As the claim of the respondent (retired employee) is based on certificate issued by the Corporation...it cannot be said that learned Labour Court has committed error in awarding the reference in favour of the respondent. Leave encashment is akin to salary which is property and depriving a person of his property without valid statutory provision is violation of the provision of Constitution of India. If an employee has earned the leave and employee has chosen to accumulate his earned leave to his credit then encashment becomes his right and in absence of any authority that right cannot be infringed by the petitioner Corporation". The court was hearing the corporation's plea against a labour court's 2018 order directing it to pay arrears of leave encashment to respondent Sadgunbhai Solanki amounting to Rs.1,63,620 with cost of Rs.1,000. Solanki was offered the work in 1975 and he worked upto 1981. Thereafter, appointment of the respondent was made on the post of Turner with effect from 1982 in the pay scale of 266-350. As respondent failed to clear departmental exam he was reverted to the post of Helper in 1986 and was placed in the pay scale of 196-231. Thereafter, his appointment was made as Junior Clerk from 1989 and was granted pay scale of 950-1500. Again he was reverted back to the post of Helper from 1993 as he had not passed the departmental exams instead of having appeared in three attempts and again he was placed in the day scale 750-940. Subsequently Solanki tendered his resignation voluntarily without depositing of notice pay for one month informing that he proposed to be retired with effect from March 7, 2013. This resignation remained unattended and thereafter he was informed to deposit amount of notice pay however, the respondent remained failed in depositing the same. In absence of the notice pay the resignation remain unaccepted. However, the respondent failed to report on duty and ultimately attained the age of superannuation on April 30, 2014. As the respondent "remained unauthorizedly absent" from March 6, 2013 to April 30, 2014 his application for benefit of leave encashment for the period of ten months amounting to Rs.2,82,703 remained unattended. Thereafter he moved a recovery application before the Labour Court for grant of benefit of leave for 10 months which came to be allowed by the Labour Court. Against this the corporation moved the high court. The corporation contended that Solanki did not work from March 6, 2013 to April 30, 2014. It was contended that despite notices addressed to him intimating him to deposit one month notice pay in view of his resignation application, he neither made the payment nor he resumed the duties. The respondent argued that his resignation application dated March 7, 2013 remained unattended. It was argued that as per the service regulation, on completion of the 90 days of filing the application for resignation he was deemed to have been retired from the service. It was argued that as neither the resignation application was allowed, signed or rejected therefore there was no question of payment of notice period.The high court however said that Labour Court relied on the certificate issued by the Corporation in June 2012 and came to the conclusion that there is a pre-existing right in the favour of the respondent and in view of the recognition of the claim by the Corporation, the respondent's plea was maintainable. With respect to the corporation's contention on the non-payment of the one month notice pay, the court said that it is an undisputed fact that March 7, 2013 application remained unattended and it was after seven months that a communication was addressed to the Respondent with regard to the payment of one month notice pay. "As per the service regulation, within a period of 90 days, the communication has to be sent to the respondent with regard to the acceptance or rejection of the application. However, for seven months there was no intimation given to the respondent," the court said. It thereafter dismissed the corporation's plea and confirmed the order passed by the Labour Court. Case Title: AHMEDABAD MUNICIPAL CORPORATION v/s SADGUNBHAI SEMULBHAI SOLANKI Case Citaion: 2025 LiveLaw (Guj) 1Click Here To Read/Download Order

Depriving An Employee Of Leave Encashment Which Is Akin To Salary And Is Thus A Property Violates His Constitutional Right: Gujarat HC

Malavika Prasad

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