Wg. Cdr. Ashwini Kumar Handa (Retd) vs Union Of India

REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 1491 OF 2018 @DIARY NO. 35797 OF 2017)

WG. CDR. ASHWINI KUMAR HANDA (RETD.) .....APPELLANT(S)

VERSUS

UNION OF INDIA & ORS. .....RESPONDENT(S)

JUDGMENT

A.K. SIKRI, J.

Delay condoned. Leave to appeal granted.

2) The appellant herein while working with the Indian Airforce in the rank of

Wing Commander has applied for and was granted study leave for a

Signature Not Verified period of two years i.e. from December 27, 2003 to December 26, 2005. Digitally signed by ASHWANI KUMAR

At that time, he had submitted an undertaking in the form of a Service Date: 2018.02.02 14:44:56 IST Reason:

Guarantee Certificate to the effect that he would serve for nine years 2

from the date of his return from study leave. On this undertaking, the

appellant was also given pay and allowance for the period of study

leave. After his return, he started serving but before the completion of

nine 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 of

study leave was deducted from his post retirement dues on the ground

that he had committed breach of contract by not serving for nine years.

3) The appellant challenged the order of recovery of pay and allowances by

filing the Original Application (OA) before the Armed Forces Tribunal

(AFT) which has been dismissed by the AFT vide order dated July 26,

2017. The plea of the appellant before the AFT was that once he was

allowed to retire prematurely on medical grounds, his undertaking

contained in service guarantee certificate furnished on November 15,

2001 could not have been enforced. The AFT has, however, dismissed

the OA preferred by the appellant assigning the reason that the medical

ground was taken by the appellant as an additional ground and it was

not the sole or main ground for premature retirement. According to the

AFT, the main ground for release was entirely different and 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 the 3

study leave rules mandate that after completing the study leave period, the Applicant will have to serve for a specific period of service. The Applicant was aware of this fact from the very beginning and as per the Service Guarantee, he had given an undertaking to this effect. Admittedly, the aforesaid amount was deducted from his post retiral dues. The grounds raised by the Applicant in the instant O.A. is that because he has taken premature retirement on the ground of his ill health, so the said ground entitles him for the refund of the deducted amount. After perusal of the application of premature release, we are of the considered view that this ground is not tenable in view of the grounds taken by him in his own application. A plain reading of the aforesaid premature release application clearly shows that the main ground for his release was his dis-satisfaction due to delay in promotion and refusal to his posting to Pune, which were mentioned as the first five grounds. The sixth ground was taken as his ill health, wherein he has stated that I am unable to concentrate on my work due to my illness. I want to give off my best to the esteemed organisation which has given me so much and to conclude this application, he has written in paragraph 6, as under:

“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. Recently I developed target organ involvement – hypertensive retinopathy – necessitating addition of another drug. Multiple factors as enumerated are having a deleterious effect on my health. I am unable to concentrate on my work due to my illness. I want to give off my best to this esteemed organization which has given me so much.”

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

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

4) When this appeal came up for preliminary hearing challenging the

aforesaid judgment of the AFT, the Court found that the aforesaid 4

approach of the AFT was without blemish and in consonance with law.

The AFT has taken note of the fact that the Service Guarantee

Certificate was submitted in terms of Army Instructions 13/78 as per

which the appellant was liable to serve for nine years from the date of

his return from study leave subject to certain exemptions like ill-health

etc. However, in the present case, it is found, as a fact, that the main

ground for seeking premature retirement was not the illness of the

appellant. To this end, the order of the AFT does not call for any

interference.

5) However, at that stage, the learned counsel for the appellant took an

altogether different plea viz. even if the Service Guarantee Certificate

was enforceable, the respondents were not entitled to deduct full pay

and allowances drawn by the appellant during the period of his study

leave inasmuch as the appellant had served for 6 years, 8 months and

19 days after return from study leave and only proportionate deduction

was permissible in law. Accordingly, notice in this appeal was issued

limited to the aforesaid question, namely, whether deduction should be

proportionate to the service already rendered under the bond executed

by the appellant. On this question of law, both the counsel have made

their submissions.

6) Learned counsel for the appellant submitted that the appellant has 5

availed study leave for two years from December 27, 2003 to December

26, 2005 and thereafter he was in service posted initially to Command

Hospital (SC) Pune till 2010 and thereafter to Command Hospital (NC)

Udhampur, Jammu and Kashmir located in Counter Insurgency

Operational Area. The appellant applied for premature retirement from

service on completion of 22 years 9 months of total service on

September 28, 2011 and he was released from service on September

15, 2012. The appellant after his study leave had served for 6 years 8

months and 19 days. He, thus, argued that as against commitment to

serve for nine years on joining the duties after study leave, the appellant

had served for substantial period of 6 years 8 months and 19 days and,

therefore, there could not have been recovery of the entire amount of

pay and allowances disbursed to him during study leave period. He

argued that this action of the respondents in compelling the appellant to

refund total amount thereby obliterating his long service after study

leave is actually a case of unjust enrichment by the State and is contrary

to the public policy. He also submitted that the respondents ought 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 is

discriminatory and violative of Article 14 of the Constitution of India

inasmuch as in other cases, the respondents have been making only 6

proportionate recovery. In support, the appellant cited the case of one

Surg Cdr Haresh Maini in whose case recovery of proportionate cost of

training/study leave etc. was made under similar circumstances. For

this purpose, the learned counsel relied upon information obtained from

the respondents vide their communication dated February 6, 2014 under

Right to Information Act, 2005.

7) Learned counsel for the respondents stoutly refuted the aforesaid

submissions. His contention was that the recovery was made in terms

of bond/undertaking which was executed by the appellant in terms of

Army Instructions 13/78 which instructions were admittedly applicable to

all the three services, namely, Army, Navy and Air Force. He argued that

the appellant herein had not challenged the aforesaid Army Rule either

before the AFT or before this Court and, therefore, he could not argue to

the contrary. In this behalf, he relied upon the judgment of this Court in

the case of State of Punjab & Ors. v. Dr. Rajeev Sarwal1 wherein it is

held that:

“6. The contention put forth on behalf of the respondent that the period of study leave could be granted at a time not exceeding 24 months does not stand to reason at all because the rule is very clear that 24 months is relatable to the entire service and not to any part of service. The validity of the rule was not challenged before the High Court. Therefore, that aspect could not be gone into by the High Court. Nor could it be said that the exercise of power by the appellant was arbitrary, in any manner, merely because that power of relaxation was used in certain cases. In our opinion relaxation also cannot be read

1 (1999) 9 SCC 240 7

into a provision of this nature where the rule itself mandates the maximum period to be 24 months for the entire service.

The order made by the High Court is, therefore, not sustainable.”

8) He also relied upon two more judgments in support of his submission

that clause of liquidated damages can be contractually incorporated,

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 into consideration before arriving at the conclusion whether the party claiming damages is entitled to the same.

(2) If the terms are clear and unambiguous stipulating the liquidated damages in case of the breach of the contract unless it is held that such estimate of damages/compensation is unreasonable or is by way of penalty, party who has committed the breach is required to pay such compensation and that is what is provided in Section 73 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 the breach is not required to prove actual loss or damage suffered by him before he can claim a decree. The court is competent to award reasonable compensation in case of breach even if no actual damage is proved to have been suffered in consequence of the breach of a contract.

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

(ii) Subir Ghosh v. Indian Iron and Steel Company 3 wherein the

2 (2003) 5 SCC 705 3 1976 SCC OnLine Cal 222 8

Calcutta 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 and that the claim by the company came specifically within S. 74 of the Contract Act, 1872, and notwithstanding the amount on the breach of the covenant. Normally, when the amount payable is either disproportionately more than the actual damage suffered on the breach or remain the same irrespective of the varying damages which may be suffered due to breach of different covenants, the amount so payable partakes the nature of penalty. In the instant case what was payable under the bond reasonably represents the damage which the company is likely to suffer in case 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 in the 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 applicable in the

instant case as in those judgments provisions of the Indian Contract Act

pertaining to damages/liquidated damages were dealt with. On the

other hand, in the instant case we are concerned with the statutory

provision under which leave was granted to the appellant herein.

Moreover, those cases dealt with the issue of pre-estimated liquidated

damages. In the instant case, the recovery made by the respondent is

not of any damages but of pay and allowances which were given to the

appellant 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 availed two 9

years study leave;

(ii) this study leave was granted to him in terms of Army Instructions

13/78 pursuant to which the appellant submitted Service

Guarantee Certificate;

(iii) as per the said Service Guarantee Certificate, the appellant was

liable to serve for nine years from the date of return from study

leave;

(iv) only on the ground of ill health the appellant could be relieved

earlier; and

(v) in the event of leaving the job without completing nine years of

service after return from study leave, the appellant was liable to

refund the pay and allowances given to him during study leave.

In the aforesaid facts, question of proportionate deduction does not

arise at all.

10) It is stated at the cost of repetition that undertaking in the form of

Service Guarantee Certificate did not specify any compensation or

damages to be paid by the appellant to the respondent in the event the

appellant did not serve for nine years on joining after the study leave. In

that eventuality, his request for proportionate deduction might have been 10

relevant on the ground that he had served for 6 years 8 months out of

the nine years and, therefore, is not liable to pay the entire

compensation as per the stipulation in the bond. On the contrary, here

is a case where the employer had paid him salary and allowances even

for the period he did not work and was on study leave. This payment

was made subject to the condition that after his return the appellant

would serve for entire nine years. As he has not served for that period,

the employer is entitled to receive back the pay and allowances given

during the period of study leave, in terms of the Army Instructions

coupled with the service guarantee certificate.

Learned counsel for the respondent is right in his submission that

validity of the aforesaid Instruction has not been questioned by the

appellant.

11) As far as argument of discrimination is concerned, there are no

foundational facts in support of this argument. No such plea was taken

either before the AFT or in the instant appeal. Only with the additional

documents, communication dated February 6, 2014 is enclosed which

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 as to

under what circumstances recovery of proportionate cost was made in 11

his case. Moreover, in the absence of pleadings, the respondents did

not have any opportunity to explain the same. Therefore, such a plea

cannot be allowed in the facts of this case.

12) Thus, we do not find any merit in this appeal, which is accordingly

dismissed.

.............................................J. (A.K. SIKRI)

.............................................J. (ASHOK BHUSHAN) NEW DELHI;

FEBRUARY 1, 2018.

12

ITEM NO.1504 COURT NO.6 SECTION XVII

S U P R E M E C O U R T O F I N D I A RECORD OF PROCEEDINGS

CIVIL APPEAL Diary No(s). 35797/2017

WG. CDR. ASHWINI KUMAR HANDA (RETD) Petitioner(s)

VERSUS

UNION OF INDIA & ORS. Respondent(s)

Date : 01-02-2018 This matter was called on for pronouncement of judgment today.

For Petitioner(s) Mr. Sudhanshu S. Pandhey, Adv.

Mr. Gaichangpou Gangmei, AOR Mr. Abhishek R. Shukla, Adv.

Mr. Arjun Singh, Adv.

For Respondent(s) Mr. Vikramjit Banerjee, Sr. Adv.

Mr. Santosh Kumar, Adv.

Mr. Sayooj Mohandas.M, Adv.

Mr. Mukesh Kumar Maroria, AOR

Hon'ble Mr. Justice A.K. Sikri pronounced the judgment of the

Bench comprising His Lordship and Hon'ble Mr. Justice Ashok

Bhushan.

Delay condoned.

Leave to appeal granted.

The appeal is dismissed in terms of the signed reportable

judgment.

Pending application(s), if any, stands disposed of

accordingly.

(Ashwani Thakur) (Mala Kumari Sharma) COURT MASTER COURT MASTER

(Signed reportable judgment is placed on the file)