The Karnataka High Court has made an important ruling that strengthens employee rights. The court declared that leave encashment is a property right under Article 300A of the Indian Constitution. This means that employers cannot deny leave encashment without a valid legal reason. The judgment came in response to a petition filed by G. Linganagouda, a former bank employee who was denied leave encashment after being dismissed from service.
Background of the Case
G. Linganagouda had been working as an Assistant Manager at Thungabhadra Gramina Bank. In 2012, the bank accused him of misconduct and started disciplinary proceedings. After an internal inquiry, the bank dismissed him from service on December 19, 2014.
Following his dismissal, Linganagouda requested the bank to pay his terminal benefits, including encashment for 220 days of privilege leave that he had accumulated over the years. However, the bank rejected his request, citing its Service Regulations of 2013. According to these regulations, an employee dismissed due to misconduct was not entitled to leave encashment.
Legal Battle for Leave Encashment
Unhappy with the bank’s decision, Linganagouda took legal action. He first sent a legal notice to the bank demanding payment. When the bank refused again, he filed a writ petition in the Karnataka High Court, asking for his leave encashment along with 10% interest.
Arguments in Court
- Linganagouda’s Argument:
- His lawyer, Sri Nagangouda M. Patil, argued that leave encashment is a legal right.
- He cited a previous judgment from the Bombay High Court (Writ Petition No. 1347/2016), which stated that leave encashment cannot be denied unfairly.
- He claimed that Regulation 67 of the bank’s rules should not be misused to withhold an employee’s rightful benefits.
- Bank’s Argument:
- The bank’s lawyer, Sri M.G. Kulkarni, defended the rejection.
- He said that Regulation 67 clearly stated that dismissed employees are not eligible for leave encashment.
- Since Linganagouda was removed for misconduct, the bank argued that he was no longer an employee and thus had no right to encash his privilege leave.
Court’s Decision
The High Court carefully examined the case and reviewed two key regulations:
- Regulation 61: This states that employees earn one day of privilege leave for every 11 days of duty.
- Regulation 67: This explains how leave may lapse in certain cases.
The court also referred to a previous case (Dattaram Atmaram Sawant v. Vidharbha Konkan Gramin Bank, 2024) where it was ruled that privilege leave is considered an employee’s property.
Based on this, the court ruled:
- Leave encashment is an earned benefit and becomes the employee’s property.
- Under Article 300A of the Constitution, no one can be deprived of their property without legal authority.
- Employers cannot deny leave encashment without a specific statutory rule that permits them to do so.
Final Verdict
The High Court declared that leave encashment is both a statutory and constitutional right. It ruled in favor of Linganagouda and directed Karnataka Gramina Bank to pay him for the 220 days of accumulated leave.
Impact of the Judgment
- This ruling reinforces employee rights, ensuring that leave encashment is protected by law.
- Employers cannot arbitrarily deny leave encashment, even if an employee has been dismissed.
- It sets an important precedent for other similar cases across India.
Conclusion
The Karnataka High Court’s decision is a significant victory for employees, ensuring that they receive their rightful financial benefits. This judgment highlights that leave encashment is not just a workplace benefit—it is a constitutional right that cannot be taken away without proper legal grounds.
