In a landmark decision, the Gauhati High Court ruled that a railway employee dismissed from service automatically forfeits their entitlement to leave encashment benefits. The division bench, comprising Chief Justice and Justice N. Unni Krishnan Nair, delivered the judgment on November 12, 2024, in the case of Union of India and Ors. vs Utpal Datta Talukdar (WP(C) 2477/2024), setting aside an earlier decision by the Central Administrative Tribunal (CAT), Guwahati Bench.
Background of the Case
The Union of India, represented by the General Manager of N.F. Railway, challenged the CAT’s December 5, 2023 order. The CAT had directed the railway authorities to release leave encashment benefits to the respondent, Utpal Datta Talukdar, a former senior section engineer who was dismissed from service following a departmental inquiry.
The disciplinary authority had dismissed Talukdar on September 27, 2021, without compassionate allowances, including pension and gratuity. His subsequent appeals to the appellate and revisional authorities were also rejected. Talukdar then moved the CAT seeking the release of leave encashment benefits, provident fund dues, and other allowances. While the CAT directed the release of leave encashment, the Gauhati High Court overturned this decision.
Legal Issues Addressed
The core issue was whether a dismissed railway employee is entitled to claim encashment of earned leave accumulated in their leave account. The petitioners argued, citing Rule 504 of the Indian Railway Establishment Code (IREC), Vol-I, and Rule 40 of the Railway Services (Pension) Rules, 1993, that dismissal leads to forfeiture of past service and all associated benefits, including earned leave.
The respondent, represented by Dr. G.J. Sharma, contended that leave earned before dismissal should not be forfeited. He relied on Rule 542(2)(b) of the IREC, which outlines the computation of earned leave for employees dismissed, removed, or deceased, and argued that the CAT rightly directed the release of benefits.
Court’s Observations and Ruling
The bench noted that Rule 504 of the IREC unequivocally states that claims to leave at credit cease upon dismissal. Similarly, Rule 40 of the Railway Services (Pension) Rules provides that dismissal or removal leads to the forfeiture of past service. The court observed:
“Leave is earned by an employee on account of services rendered. If past service stands forfeited upon dismissal, the leave earned from such service must also be forfeited. Any other interpretation would contradict the express provisions of the rule.”
The court further clarified that the CAT erred in concluding that Rule 504 was irrelevant to leave encashment. It stated:
“The denial of leave encashment benefits is a natural consequence of dismissal. The disciplinary authority need not separately stipulate this in its order.”
The court also rejected the respondent’s reliance on Rule 542(2)(b) and Rule 550(B)(1)(ii) of the IREC, stating that these provisions pertain to computation methods and do not override the consequences of dismissal.
Decision
Setting aside the CAT’s order, the court held that Talukdar was not entitled to leave encashment benefits due to the forfeiture of his past service. However, the bench clarified that its findings were limited to this issue and would not prejudice the ongoing challenge to Talukdar’s dismissal before the CAT in another proceeding.
The petitioners were represented by Ms. B. Sarma, Central Government Counsel, while Dr. G.J. Sharma appeared for the respondent.
