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TMI Blog2023 (2) TMI 45X X X X Extracts X X X X X X X X Extracts X X X X ..... ensation as payable under the cost to company formula. Damages - HELD THAT:- The court felt that the person, whose employment has been summarily terminated, would naturally suffer mental trauma. So also his family, and suddenly they would have no income also to survive. It is for that reason the appointment letter itself provided for 3 months notice or salary in lieu of 3 months notice. Appellant was duty bound to hand over the severance pay along with the letter of termination and not waited for two and half months to make that payment. Therefore, Trial Court was justified in granting the amount of Rs.2,50,000/- as damages. Perhaps, this would work as deterrent to all corporate employers that they cannot target a helpless employee by using its own muscle and money power. A sum of Rs.3,20,807/- together with proportionate interest be reduced from the decretal amount deposited in the Trial Court. That would leave us to decide what to do with this amount of Rs.3,20,807/- plus accumulated interest thereon. Appeal allowed in part. - FIRST APPEAL NO.1539 OF 2012 WITH INTERIM APPLICATION NO.1161 OF 2020 IN FIRST APPEAL NO.1539 OF 2012 - - - Dated:- 20-1-2023 - K. R. SHRI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... respondent. In the termination letter, appellant has stated as under: As per your appointment letter dated November 29, 2001, your services are liable to be terminated without any notice or salary in lieu thereof for any act of inefficiency. Hence it has been decided to terminate your services with immediate effect, i.e., close of office hours today Tuesday 31st October 2006. As a goodwill gesture, the company shall pay you an amount equivalent to three months salary along with your Full and Final Settlement. 6. Respondent filed Civil Suit challenging the termination of his employment. Respondent claimed that: a) the termination of services letter dated 31st October 2006 be declared as null and void, b) appellant to pay respondent a sum of Rs.5,49,35,488/- towards arrears of services contract compensations, encashment of combined balance earned leave, cost of living allowance (COLA) DA etc., c) sum of Rs.4,44,017- towards less accumulated provident fund balance and d) sum of Rs.3,50,000/- towards court fees plus legal expenses. 7. Appellant filed written statement and contested the suit. 8. Issues were settled by the Trial Court per Exhibit-29 and the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at 18% from the date of termination, i.e., 1st November 2006 till realization of entire amount; (c) Rs.2,50,000/- towards damages to be paid by appellant to respondent within 3 months from the date of order; and (d) costs. 10. This appeal was admitted on 18th February 2013. Pending admission, appellant also deposited entire decretal amount, (except cost part), part of which respondent has withdrawn pursuant to an order dated 18th February 2013. Respondent was allowed to withdraw Rs.5,00,000/- without furnishing any security and further allowed to withdraw Rs.10,00,000/- on furnishing security to the satisfaction of the executing court and the executing court has been directed to deposit the balance amount in a fixed deposit scheme of any Nationalised Bank with renewal clause. 11. On or about 13th January 2020 respondent took out an interim application No.1161 of 2020 which is still pending for releasing balance amount of Rs.17,16,909/- that continued to be deposited in the Trial Court. When the interim application came up for hearing, appellant had raised an objection that this court will not have jurisdiction to entertain and dispose the interim application and the amount d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which was the last drawn package, divided it by 12 and multiplied by 3 (29,32,715 x 12/3) to arrive at the figure of Rs.7,33,179/- compensation in lieu of notice, payable to respondent. Trial Court has given credit for a sum of Rs.2,51,067/- which was paid in February 2007 after the termination and that is how arrived at the decretal figure of Rs. 4,82,112/-; (e) The Trial Court has not analysed the submissions made by appellant and has not concluded as to why the cost to company was taken into account and not the basic salary, as submitted by appellant. LEAVE ENCASHMENT 14. Mr. Bharucha submitted: (a) that full and final settlement statement annexed to Exhibit-55 provides for leave encashment of Rs.3,20,807/- and the leave available was only 115 and erroneously a figure of Rs.9,24,006/- is shown for encashment of 115 days. By paying Rs.4,72,840/- vide letter dated 12th February 2007 (Exhibit 55), appellant has already paid to respondent an amount of Rs.3,20,807/- towards leave encashment. Mr. Bharucha submitted that even assuming for the sake of argument that Rs.9,24,006/- was the amount payable towards the leave encashment, the Trial Court erred in not givi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed the amount of Rs.2,50,000/- awarded and hence, has not impugned the Trial Court s order and judgment or any part there of. OUR FINDINGS SALARY IN LIEU OF NOTICE 19. We do not agree with the submissions of Mr. Bharucha because in our view, the definition salary was modified during the time when respondent was in appellant s employment. Clause 8(d) of Exhibit 49 defines what is salary in case respondent s services are terminated without notice. But that underwent a change when in March 2002 the salary and allowances payable to him was restructured. There was no COLA. Moreover, there is no evidence to indicate that basic pay mentioned in the revised compensation following the restructuring included COLA. That one has to only surmise. There is no cross examination of respondent also on this aspect. 20. Per contra in the cross examination of respondent, suggestions were put to respondent that his paid leave was calculated on the basis of basic salary. Cross examination proceeds as under: I have claimed 122 days for my leave encashment. In these 122 days neither causal nor sick leaves are included. I have not availed any P. L. during my service with the de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... while determining the compensation in lieu of notice. We should also note that if appellant had given 3 months notice for termination, appellant would have certainly paid respondent the entire compensation as payable under the cost to company formula. DAMAGES 22. When one reads the entire impugned judgment, what has weighed in the mind of the court is that appellant did not even make an attempt to explain why, when they have terminated respondent s service from 1st November 2006, the compensation was paid only on 12th February 2007. The court felt that the person, whose employment has been summarily terminated, would naturally suffer mental trauma. So also his family, and suddenly they would have no income also to survive. It is for that reason the appointment letter itself provided for 3 months notice or salary in lieu of 3 months notice. Appellant was duty bound to hand over the severance pay along with the letter of termination and not waited for two and half months to make that payment. Therefore, Trial Court was justified in granting the amount of Rs.2,50,000/- as damages. Perhaps, this would work as deterrent to all corporate employers that they cannot target a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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