High Court Ruling: Right to Leave Encashment for Resigned Employees Upheld
In a landmark decision, the High Court of Judicature at Bombay recently addressed a critical issue affecting employees who resign from their positions. In Writ Petition No. 12161 of 2019, the Court ruled in favor of petitioners Dattaram Atmaram Sawant and Seema Dattaram Sawant, affirming their right to encash their accumulated privilege leave despite having resigned from their roles at Vidharbha Konkan Gramin Bank.
Case Background
Dattaram Atmaram Sawant and Seema Dattaram Sawant, both retired employees of Vidharbha Konkan Gramin Bank, sought to encash their accumulated privilege leave after resigning from their posts. Dattaram served as an Assistant Manager from December 1984 to August 2015, while Seema worked as a Cashier from August 1984 to September 2014. Collectively, they had accumulated significant amounts of privilege leave, which they sought to encash upon resignation.
Core Issues
The primary question before the Court was whether the petitioners, having resigned from their positions, lost their right to encash their accumulated privilege leave. Under the Vidharbha Konkan Gramin Bank (Officers and Employees) Service Regulations, 2013, employees were entitled to accumulate and encash privilege leave up to 240 days. However, the Bank argued that the provision for encashment of leave for resigned employees came into effect only after September 14, 2015, after both petitioners had resigned.
Court’s Analysis
The Court analyzed the relevant regulations and legal precedents, focusing on the following points:
- Statutory Right to Leave Encashment: The Court emphasized that the right to leave encashment is a statutory entitlement akin to salary. Depriving an employee of this right without a valid statutory provision would violate Article 300 A of the Constitution of India.
- Accrual of Right: The Court noted that the right to encash privilege leave accrues once the leave is earned. Regulations governing privilege leave and its encashment do not explicitly state that resignation nullifies this accrued right.
- Judicial Precedents: Citing various precedents, the Court observed that the right to encash earned leave has been upheld in numerous cases involving different forms of cessation of service, including resignation and dismissal. This reaffirmed the position that accumulated leave is an employee’s property and cannot be forfeited without explicit statutory backing.
Key Rulings
The Court made several critical rulings in favor of the petitioners:
- Entitlement to Leave Encashment: The Court declared that the petitioners were entitled to encash their accumulated privilege leave. The Respondent Bank’s refusal to grant this benefit was deemed arbitrary and unsustainable.
- Payment with Interest: The Bank was directed to calculate and pay the amounts towards encashment of privilege leave to the petitioners along with interest at 6% per annum within six weeks.
Implications of the Judgment
This judgment has significant implications for employees and employers alike. It underscores the principle that statutory rights, once accrued, cannot be taken away without clear and explicit legal provisions. For employees, this ruling reinforces the security of their accrued benefits, even in cases of resignation. For employers, it highlights the importance of clear and unambiguous regulations regarding employee benefits.
Conclusion
The High Court’s decision in this case reaffirms the protection of employee rights under statutory regulations. It serves as a crucial reminder that accrued benefits like leave encashment constitute an employee’s property and are protected by law. Employers must ensure compliance with statutory provisions to avoid arbitrary denial of such entitlements. This ruling is a victory for employees, safeguarding their right to earned benefits regardless of the circumstances of their service cessation.
