Summary
The Supreme Court held that a Sikkim government servant who has availed leave encashment of the maximum 300 days on superannuation under Rule 36 of the Sikkim Government Services (Leave) Rules, 1982 cannot claim leave encashment a second time on being relieved after re-employment. Rule 32, which applies the Leave Rules to re-employed servants as if newly entered in service, governs grant of leave during re-employment and does not revive the 300-day encashment; Rules 32 and 36 operate in different spheres. The State's clarificatory memorandum and cancellation of the second sanction were upheld.
Issues
- Whether an employee who availed leave encashment of a maximum of 300 days on attaining superannuation under Rule 36 of the Leave Rules is entitled to leave encashment again on being relieved after a period of re-employment.
- Whether Rule 32 of the Leave Rules, deeming a re-employed servant to have entered service afresh, must be read with Rule 36 so as to extend the encashment benefit to the period of re-employment.
- Whether the clarificatory office memorandum dated 27.02.2020 and the cancellation of the earlier sanction of leave encashment were valid.
- Whether cancellation of the sanction without a hearing violated natural justice.
Provisions considered
- Rule 36, Sikkim Government Services (Leave) Rules, 1982Rule 36 permits cash equivalent of leave salary for earned leave at credit 'on the date of his retirement', subject to a maximum of 300 days, to a servant who 'retires from service under the Sikkim Government Service Rules, 1974'. The Court read it as having two limbs: retirement under the Service Rules, and earned leave at credit on the date of retirement up to 300 days. It applies to regular servants retiring on superannuation (including those whose service was extended under Rule 31) and not to relieving after re-employment, so encashment cannot be granted a second time. (¶¶ 16, 19, 20, 21, 22, 29, 33)
- Rule 32, Sikkim Government Services (Leave) Rules, 1982Rule 32 provides that for a servant re-employed after retirement the Leave Rules apply as if he had entered service for the first time on the date of re-employment. The Court held this governs grant of leave during re-employment and does not ipso facto bring the re-employed servant within Rule 36 or revive the 300-day encashment afresh; Rules 32 and 36 are independent and cannot be read in conjunction. (¶¶ 16, 18, 21, 23, 24)
- Rule 31, Sikkim Government Services (Leave) Rules, 1982Rule 31 deals with leave during extension of service beyond the date of retirement, subject to a maximum of 300 days. The Court held that in cases of extension Rule 36 applies with the rigour that, adding the extended period, encashment beyond 300 days is not permitted; the encashment benefit is available to extended-service retirees but not to re-employed retirees. (¶¶ 16, 18, 20, 22, 29, 30)
- Rules 6, 17 and 18, Sikkim Government Services (Leave) Rules, 1982Leave is earned only for periods on duty; earned leave accrues at one-eleventh of duty and ceases to accumulate once the credit exceeds 300 days; Rule 18 prescribes calculation. (¶¶ 16, 17)
- Rules 98 and 102, Sikkim Government Service Rules, 1974Rule 98 fixes retirement on superannuation at the end of the month in which the servant attains 58 years; Rule 102 permits re-employment of a servant retired under Rule 98 at the Government's discretion in its interest. Re-employment is not a right of the retired employee. Rule 36 of the Leave Rules applies to those who retire under these Service Rules from regular service. (¶¶ 15, 20, 21)
- Article 14, Constitution of IndiaThe respondent argued that denial of the benefit while similarly placed re-employed employees had received it was discriminatory; the Court upheld the State's correction of the mistake as consonant with the Rules. (¶¶ 12, 31)
Held
- Rule 36 of the Leave Rules has two limbs: retirement must be under the Sikkim Government Service Rules, 1974, and the benefit is of earned leave standing at credit on the date of retirement, up to 300 days. The words 'who retires from service under the Sikkim Government Service Rules, 1974' show the legislative intent that encashment is available on retirement from regular service, not on relieving after re-employment. (¶¶ 19, 20, 22)
- Mere applicability of Rule 32 does not ipso facto bring a re-employed servant within the expression 'government servant' to whom Rule 36 applies. Rule 32 governs grant of leave during re-employment as if the servant had newly entered service; it cannot be read to revive the 300 days of unutilised leave afresh for re-employed employees who have already availed the maximum encashment during regular service. There is no interplay between Rules 32 and 36; they are independent and apply in different spheres. (¶¶ 21, 23, 24)
- The Leave Rules recognise the encashment benefit for a servant whose service has been extended (Rule 31) and who retires from regular service, but not for a re-employed retired servant; encashment is permissible up to a maximum of 300 days as on the date of retirement, inclusive of any extension of service. (¶¶ 18, 20, 29)
- Leave encashment is deferred compensation grounded in equity and economic security, but courts must interpret such provisions so as to prevent an employee claiming encashment multiple times for the same accrual, which would amount to unjust enrichment at the cost of the public exchequer, while ensuring employees receive what they are lawfully entitled to. (¶¶ 25, 26, 27, 28)
- The State's clarificatory office memorandum dated 27.02.2020, limiting encashment to a maximum of 300 days inclusive of extension of service and re-employment, is in consonance with Rules 31, 32 and 36, and the cancellation of the second sanction dated 31.05.2019 was in accordance with law. The Single Judge erred in applying the deeming fiction of Rule 32 to Rule 36 and the Division Bench erred in affirming it. (¶¶ 24, 30, 31)
- The plea that the sanction was cancelled without an opportunity of hearing, though attractive at first blush, was of no substance: where the respondent could not justify his claim to a second encashment even after being afforded reasonable opportunity, no prejudice was caused by the cancellation. (¶ 32)
Result
Appeals allowed; orders of the Single Judge and the Division Bench of the Sikkim High Court set aside; the State's cancellation of the second leave encashment upheld; pending applications disposed of; no order as to costs.