The Supreme Court has ruled that the managements of Steel Authority of India Limited and Bokaro Steel Plant are entitled to withhold and deduct gratuity payments of employees who had retired but failed to surrender their quarters within 12 months of their superannuation.
“An employee cannot be permitted to approbate and reprobate. Having availed of the benefit of retaining the staff quarters by offering the gratuity amount as security, the employee cannot simultaneously claim that withholding the said amount entitles the ex-employees to interest on the withheld gratuity/ security amount.
“To award interest in such circumstances would effectively reward unauthorised occupation of public premises,” a bench of Justices Pankaj Mithal and S.V.N. Bhatti said in a judgment.
The apex court passed the ruling while allowing appeals filed by the two managements challenging the judgment of Jharkhand High Court, which held that gratuity cannot be deducted or withheld from retiring employees.
Interpreting the SAIL Gratuity Rules, 1978, read with the policy under O&M/Procedure/789 dated 26.03.2009, the apex court said the management is expressly empowered to withhold the gratuity amount payable to an ex-employee, or his nominee/ legal heirs in the event of death, for non-compliance with the SAIL’s rules, including non-vacation of the management’s accommodation.
“Further, no interest shall be payable on the gratuity amount so withheld during the period of unauthorised occupation. The amount ultimately payable to the ex-employee upon vacation of the allotted staff quarter shall be computed after adjusting the penal rent accrued for retention beyond the grace period permissible under SAIL’s policy, in the manner and at the rate as determined in accordance with the said rules and applicable circulars,” Justice Bhatti, who authored the judgment, observed.
He added: “The ex-employee is obligated to vacate and surrender possession of the staff quarters, and the management is obligated to release the gratuity amount after making permissible deductions. Neither obligation can be enforced in isolation nor independently of the other.”
However, the bench, to strike a balance between management and retired employees, fixed ₹1,000 per month as penal rent to be adjusted for the retention period beyond the grace period.