WG CDR. ASHWINI KUMAR HANDA (RETD.) versus UNION OF INDIA & ORS. on 1 February 2018

[2018] 1 S.C.R. 873

WG CDR. ASHWINI KUMAR HANDA (RETD.)

v.

UNION OF INDIA & ORS.

(Civil Appeal No. 1491 of 2018)

FEBRUARY 01, 2018

[A. K. SIKRI AND ASHOK BHUSHAN, JJ.]

Service Law:

Refund of pay and allowances – Propriety of – Study leavegranted to appellant in terms of Army Instructions 13/78 – SubmittedService Guarantee Certificate whereby, he was liable to serve fornine years from the date of return from study leave – Appellant, onreturn from study leave, after serving for 6 years and 8 months waspermitted to retire prematurely – Pay and allowances paid duringstudy leave were deducted from his post retirement dues on theground that he committed breach of contract by not serving fornine years – Order of recovery challenged – Armed Forces Tribunaldismissed the case of appellant – On appeal to Supreme Court,appellant took the plea that since he had served for 6 years 8 months,there should have been proportionate deduction; and not makingproportionate deduction was discriminatory as in case of anotherofficer proportionate deduction was made – Held: In the facts ofthe case, proportionate deduction is not permissible – Plea ofdiscrimination also not admissible as it was taken for the first time.

Dismissing the appeal, the Court

HELD : 1. In the facts of the present case, question ofproportionate deduction does not arise at all. The employer hadpaid him salary and allowances even for the period he did notwork and was on study leave. This payment was made subject tothe condition that after his return the appellant would serve forentire nine years. As he has not served for that period, theemployer is entitled to receive back the pay and allowances givenduring the period of study leave, in terms of the Army Instructionscoupled with the Service Guarantee Certificate. Validity of theaforesaid Instruction has not been questioned by the appellant.[Para 9 and 10] [880-E-G]

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874SUPREME COURT REPORTS

[2018] 1 S.C.R.

AOil & Natural Gas Corporation Ltd. v. Saw Pipes Ltd.(2003) 5 SCC 705 : [2003] 3 SCR 691 ; Subir Ghoshv. Indian Iron and Steel Company 1976 SCC OnLineCal 222 – distinguished.

State of Punjab & Ors. v. Dr. Rajeev Sarwal (1999) 9BSCC 240 – referred to.

2. So far as the plea of discrimination is concerned, thereare no foundational facts in support of this argument. No suchplea was taken either before the Tribunal or in the instant appeal.Only with the additional documents, communication datedCFebruary 6, 2014 is enclosed which the appellant has receivedunder the Right to Information Act, 2005 in respect of anotherofficer. It is not known as to under what circumstances recoveryof proportionate cost was made in his case. Moreover, in theabsence of pleadings, the respondents did not have anyopportunity to explain the same. Therefore, such a plea cannotDbe allowed in the facts of the present case. [Para 11] [881-B-D]

CIVIL APPELLATE JURISDICTION : Civil Appeal No. 1491of 2018.FFrom the Judgment and Order dated 26.07.2017 in O. A. No. 188of 2013 / Order dated 09.09.2017 in M. A. No. 1493 of 2017 with M.A.No. 1494 of 2017 in O. A. No. 188 of 2013 of the Armed Forces Tribunal,Regional Bench, Lucknow.

Sudhanshu S. Pandey, Gaichangpou Gangmei, Abhishek R. Shukla,GArjun Singh, Advs for the Appellant.

Vikramjit Banerjee, Sr. Adv, Santosh Kumar, Sayooj MohandasM., M. K. Maroria, Advs for the Respondents.

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The Judgment of the Court was delivered by

A. K. SIKRI, J. 1. Delay condoned. Leave to appeal granted.

2. The appellant herein while working with the Indian Airforce inthe rank of Wing Commander has applied for and was granted studyleave for a period of two years i.e. from December 27, 2003 to December26, 2005. At that time, he had submitted an undertaking in the form of aService Guarantee Certificate to the effect that he would serve for nineyears from the date of his return from study leave. On this undertaking,the appellant was also given pay and allowance for the period of studyleave. After his return, he started serving but before the completion ofnine years period, applied for premature retirement on health grounds.His request for premature retirement was accepted. At the same time,the pay and allowances drawn by the appellant during the period ofstudy leave was deducted from his post retirement dues on the groundthat he had committed breach of contract by not serving for nine years.

3. The appellant challenged the order of recovery of pay andallowances by filing the Original Application (OA) before the ArmedForces Tribunal (AFT) which has been dismissed by the AFT vide orderdated July 26, 2017. The plea of the appellant before the AFT was thatonce he was allowed to retire prematurely on medical grounds, hisundertaking contained in service guarantee certificate furnished onNovember 15, 2001 could not have been enforced. The AFT has,however, dismissed the OA preferred by the appellant assigning thereason that the medical ground was taken by the appellant as an additionalground and it was not the sole or main ground for premature retirement.According to the AFT, the main ground for release was entirely differentand his premature release was not ordered on the ground of illness.Relevant portion of the order of the AFT is reproduced below:

“13. Thus, from the above facts, it is abundantly clear that thestudy leave rules mandate that after completing the study leaveperiod, the Applicant will have to serve for a specific period ofservice. The Applicant was aware of this fact from the verybeginning and as per the Service Guarantee, he had given anundertaking to this effect. Admittedly, the aforesaid amount wasdeducted from his post retiral dues. The grounds raised by theApplicant in the instant O.A. is that because he has takenpremature retirement on the ground of his ill health, so the saidground entitles him for the refund of the deducted amount. After A

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Aperusal of the application of premature release, we are of theconsidered view that this ground is not tenable in view of thegrounds taken by him in his own application. A plain reading ofthe aforesaid premature release application clearly shows thatthe main ground for his release was his dis-satisfaction due todelay in promotion and refusal to his posting to Pune, which wereBmentioned as the first five grounds. The sixth ground was takenas his ill health, wherein he has stated that I am unable toconcentrate on my work due to my illness. I want to give off mybest to the esteemed organisation which has given me so muchand to conclude this application, he has written in paragraph 6, asCunder:

“6. I was diagnosed with disabilities – primary hypertension& PIVD about ten months after coming to my present unit,which is in Counter Insurgency Operation – CI Ops. RecentlyI developed target organ involvement – hypertensive retinopathy– necessitating addition of another drug. Multiple factors asenumerated are having a deleterious effect on my health. I amunable to concentrate on my work due to my illness. I want togive off my best to this esteemed organization which has givenme so much.”

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Contents of paragraph 7 of his own application show that themain ground for premature retirement were the other grounds.

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14. It makes it abundantly clear that the main ground for hispremature retirement from the service was his supersession andhis family issue. It is not the case where the applicant has prayedFfor his premature retirement mainly on the ground of his ill health.”

4. When this appeal came up for preliminary hearing challengingthe aforesaid judgment of the AFT, the Court found that the aforesaidapproach of the AFT was without blemish and in consonance with law.The AFT has taken note of the fact that the Service Guarantee CertificateGwas submitted in terms of Army Instructions 13/78 as per which theappellant was liable to serve for nine years from the date of his returnfrom study leave subject to certain exemptions like ill-health etc.However, in the present case, it is found, as a fact, that the main groundfor seeking premature retirement was not the illness of the appellant.To this end, the order of the AFT does not call for any interference.

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5. However, at that stage, the learned counsel for the appellanttook an altogether different plea viz. even if the Service GuaranteeCertificate was enforceable, the respondents were not entitled to deductfull pay and allowances drawn by the appellant during the period of hisstudy leave inasmuch as the appellant had served for 6 years, 8 monthsand 19 days after return from study leave and only proportionate deductionwas permissible in law. Accordingly, notice in this appeal was issuedlimited to the aforesaid question, namely, whether deduction should beproportionate to the service already rendered under the bond executedby the appellant. On this question of law, both the counsel have madetheir submissions.

6. Learned counsel for the appellant submitted that the appellanthas availed study leave for two years from December 27, 2003 toDecember 26, 2005 and thereafter he was in service posted initially toCommand Hospital (SC) Pune till 2010 and thereafter to CommandHospital (NC) Udhampur, Jammu and Kashmir located in CounterInsurgency Operational Area. The appellant applied for prematureretirement from service on completion of 22 years 9 months of totalservice on September 28, 2011 and he was released from service onSeptember 15, 2012. The appellant after his study leave had served for6 years 8 months and 19 days. He, thus, argued that as againstcommitment to serve for nine years on joining the duties after studyleave, the appellant had served for substantial period of 6 years 8 monthsand 19 days and, therefore, there could not have been recovery of theentire amount of pay and allowances disbursed to him during study leaveperiod. He argued that this action of the respondents in compelling theappellant to refund total amount thereby obliterating his long serviceafter study leave is actually a case of unjust enrichment by the State andis contrary to the public policy. He also submitted that the respondentsought to have given due consideration to this aspect as model employer.Another submission of the learned counsel for the appellant was that,even otherwise, the aforesaid action on the part of the respondents isdiscriminatory and violative of Article 14 of the Constitution of Indiainasmuch as in other cases, the respondents have been making onlyproportionate recovery. In support, the appellant cited the case of oneSurg Cdr Haresh Maini in whose case recovery of proportionate cost oftraining/study leave etc. was made under similar circumstances. Forthis purpose, the learned counsel relied upon information obtained from A

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Athe respondents vide their communication dated February 6, 2014 underRight to Information Act, 2005.

7. Learned counsel for the respondents stoutly refuted the aforesaidsubmissions. His contention was that the recovery was made in termsof bond/undertaking which was executed by the appellant in terms ofBArmy Instructions 13/78 which instructions were admittedly applicableto all the three services, namely, Army, Navy and Air Force. He arguedthat the appellant herein had not challenged the aforesaid Army Ruleeither before the AFT or before this Court and, therefore, he could notargue to the contrary. In this behalf, he relied upon the judgment of thisCourt in the case of State of Punjab & Ors. v. Dr. Rajeev Sarwal[1]Cwherein it is held that:

“6. The contention put forth on behalf of the respondent that theperiod of study leave could be granted at a time not exceeding 24months does not stand to reason at all because the rule is veryclear that 24 months is relatable to the entire service and not toDany part of service. The validity of the rule was not challengedbefore the High Court. Therefore, that aspect could not be goneinto by the High Court. Nor could it be said that the exercise ofpower by the appellant was arbitrary, in any manner, merelybecause that power of relaxation was used in certain cases. InEour opinion relaxation also cannot be read into a provision of thisnature where the rule itself mandates the maximum period to be24 months for the entire service. The order made by the HighCourt is, therefore, not sustainable.”

8. He also relied upon two more judgments in support of hisFsubmission that clause of liquidated damages can be contractuallyincorporated, which would be enforceable in law. These are:

(i) Oil & Natural Gas Corporation Ltd. v. Saw Pipes Ltd.[2]

“(1) Terms of the contract are required to be taken intoconsideration before arriving at the conclusion whether the partyGclaiming damages is entitled to the same.

(2) If the terms are clear and unambiguous stipulating the liquidateddamages in case of the breach of the contract unless it is held thatsuch estimate of damages/compensation is unreasonable or is by 1(1999) 9 SCC 240H2(2003) 5 SCC 705

way of penalty, party who has committed the breach is requiredto pay such compensation and that is what is provided in Section73 of the Contract Act.

(3) Section 74 is to be read along with Section 73 and, therefore,in every case of breach of contract, the person aggrieved by thebreach is not required to prove actual loss or damage suffered byhim before he can claim a decree. The court is competent toaward reasonable compensation in case of breach even if no actualdamage is proved to have been suffered in consequence of thebreach of a contract.

(4) In some contracts, it would be impossible for the court toassess the compensation arising from breach and if thecompensation contemplated is not by way of penalty orunreasonable, the court can award the same if it is genuine pre-estimate by the parties as the measure of reasonablecompensation.”

(ii) Subir Ghosh v. Indian Iron and Steel Company[3]wherein theCalcutta High Court laid down the following proposition of law:

“It was contended for the appellant that the agreement was one-sided, against public policy and constituted restraint on trade andthat the claim by the company came specifically within S. 74 ofthe Contract Act, 1872, and notwithstanding the amount on thebreach of the covenant. Normally, when the amount payable iseither disproportionately more than the actual damage sufferedon the breach or remain the same irrespective of the varyingdamages which may be suffered due to breach of differentcovenants, the amount so payable partakes the nature of penalty.In the instant case what was payable under the bond reasonablyrepresents the damage which the company is likely to suffer incase the appellant leaves the company in the midst of the training,and as such, the amount so payable is nothing but a genuine pre-estimate of the damage which the company is liable to sustain inthe event of breach on the part of the appellant.”

9. We may observe at the outset that the judgments in Oil &Natural Gas Corporation Ltd. and Subir Ghosh would not be applicablein the instant case as in those judgments provisions of the Indian Contract AB

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AAct pertaining to damages/liquidated damages were dealt with. On theother hand, in the instant case we are concerned with the statutoryprovision under which leave was granted to the appellant herein.Moreover, those cases dealt with the issue of pre-estimated liquidateddamages. In the instant case, the recovery made by the respondent isnot of any damages but of pay and allowances which were given to theBappellant during the period the appellant was on study leave. This matter,therefore, has to be looked into keeping in mind the following aspects:

(i) the appellant, while serving with the respondent, had availedtwo years study leave; C(ii) this study leave was granted to him in terms of ArmyInstructions 13/78 pursuant to which the appellant submittedService Guarantee Certificate;

(iii) as per the said Service Guarantee Certificate, the appellantwas liable to serve for nine years from the date of returnDfrom study leave;

(iv) only on the ground of ill health the appellant could be relievedearlier; and

(v) in the event of leaving the job without completing nine yearsof service after return from study leave, the appellant wasEliable to refund the pay and allowances given to him duringstudy leave.

In the aforesaid facts, question of proportionate deduction doesnot arise at all.

10. It is stated at the cost of repetition that undertaking in theFform of Service Guarantee Certificate did not specify any compensationor damages to be paid by the appellant to the respondent in the event theappellant did not serve for nine years on joining after the study leave. Inthat eventuality, his request for proportionate deduction might have beenrelevant on the ground that he had served for 6 years 8 months out ofGthe nine years and, therefore, is not liable to pay the entire compensationas per the stipulation in the bond. On the contrary, here is a case wherethe employer had paid him salary and allowances even for the period hedid not work and was on study leave. This payment was made subjectto the condition that after his return the appellant would serve for entirenine years. As he has not served for that period, the employer is entitledH

to receive back the pay and allowances given during the period of studyleave, in terms of the Army Instructions coupled with the serviceguarantee certificate.

Learned counsel for the respondent is right in his submission thatvalidity of the aforesaid Instruction has not been questioned by theappellant.

11. As far as argument of discrimination is concerned, there areno foundational facts in support of this argument. No such plea wastaken either before the AFT or in the instant appeal. Only with theadditional documents, communication dated February 6, 2014 is enclosedwhich the appellant has received under the Right to Information Act,2005 in respect of Surg Cdr Haresh Maini. On the basis of this document,oral submission was made at the time of arguments. It is not known asto under what circumstances recovery of proportionate cost was madein his case. Moreover, in the absence of pleadings, the respondents didnot have any opportunity to explain the same. Therefore, such a pleacannot be allowed in the facts of this case.

12. Thus, we do not find any merit in this appeal, which isaccordingly dismissed.

Kalpana K. Tripathy

Appeal dismissed.

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