1990 PLP 1132 (MLD)

(i) Death. (ii) Refusal in writing of leave during service to the extent such leave was refused.

45. An employee shall cease to earn any leave from the date of notice of termination of service being served on either side."

3. On issues being framed, evidence was recorded from either side and relevant portion of the evidence of applicant Tehsin A. Mehmoodi is reproduced, as herein below:‑ "I did not claim about the encashment of earned leave in my service. I claimed after my service. I was not discharged due to misconduct. I did not leave the work without giving notice. I claim encashment of notice through the suit."' On the other hand, Noor Ahmed Memon, witness for PASMIC, on the relevant questions, made a statement as hereunder reproduced:‑ "It is correct that (plaintiff) was relieved on 17‑2‑1982 and till then he was an employee and in service, and has (been) attending the service but he was no (on) leave. The leave encashment application was submitted by the plaintiff after he was released on 17‑2‑1982. He was (in) credit of 90 days of earned leave on the date of release."

4. On such evidence, as aforesaid, and on interpretation of rules 44 and 45, as reproduced above, the trial Court decreed the suit. On appeal being preferred such decree was modified and encashment of earned leave was allowed but only to the extent of seven days.

5. It is contended by Mr. M. M. Mehmoodi, appearing for the applicant here, that not only the rules aforesaid have been misinterpreted by the learned lower Appellate Court but that evidentiary material, which indicated discriminatory behaviour, on the part of PASMIC, has not been duly considered. In response, Mr. Azhar Ali Siddiqui argues that the rules have been correctly interpreted and, further, not only that there is no discrimination involved, PASMIC has, actually, taken an indulgent attitude in relation to the applicant, in so far as, permitting waiver of the remainder of the bond period of over two months was concerned.

6. It would first be appropriate to examine rules 44 and 45 of the Rules of Service aforesaid, for it is on a proper interpretation of these rules alone that it can be said whether the applicant was right in pressing for his purported entitlement or, conversely, whether PASMIC had not applied the rules, according to their letter and spirit.

7. As seen above, sub‑rule (1) of rule 44 involves categorical prohibitions, which are three in number namely, that leave salary shall not be admissible to an employee in lieu of earned leave (a) while he is still in service, (b) if he is discharged on account of misconduct and (c) when he has left his work without serving proper notice. Sub‑rule (2) of rule 44 appears, in effect, to be a rider upon or a proviso to the rule of non‑encashment of earned leave by way of leave salary, while the employee is still in service. The effect of such sub‑rule seems to be that leave salary, in lieu of earned leave, would become payable to an employee (a) in case of his death (while in service), or (b) where there is a refusal in writing for grant of leave, during service, but encashment would be limited to the extent of the leave refused. It would, therefore, emerge that, in so far as, leave salary in lieu of earned leave is concerned there is no absolute prohibition for such encashment, even for the duration of service, since the absolute terms in sub‑rule (1) of rule 44 have come to be conditioned and softened by the following sub‑rule namely, sub‑rule (2) of Rule 44, which sub‑rule in itself provides that in case of death of an employee, irrespective of any other compliance and irrespective of any other condition, the earned leave, accumulated on such date and standing to his credit, would ipso facto become convertible to salary in lieu of leave. Likewise, where leave is applied for against accumulations thereof and is refused, the refused portion of the applied leave becomes encashable, by way of leave salary, irrespective of the employee being in service. Thus, subject to the foregoing relaxations, there may be a prohibition for payment of leave salary against accumulated leave while service lasts.

8. However, even if earned leave be not encashable, against salary in lieu thereof, while the employee is "still in service" there does not seem to be any prohibition on encashment of accumulated earned leave by way of corresponding salary, when the employer and the employee part relationship. Thus, without any conditions or trappings, it would appear that once an employee decides upon severance of service or is terminated by the employer, (except in prohibited cases, where the discharge has come about on account of misconduct or on the basis of abandonment of work, without "proper notice", on the part of the employee) there does not seem to be any prohibition of conversion of his accumulated leave against due salary in lieu thereof, for the prohibition only is, as observed above, in the context of such a move for the period the service happens to subsist. Therefore, in all cases, upon termination, subject to the foregoing exceptions, due encashment as observed above, can be sought and granted.

9. Even while the service is continued, encashment can be made of accumulated leave where, as adverted to above, request is made for grant of leave and is refused. In such a case, as well, as right for encashment accrues to the employee. Inter alia, the case of the applicant here is that he applied for such leave, while he was still in service on 8‑2‑1982, for a period of 90 days, but, that such leave was refused, ostensibly, on the ground that the applicant had already availed 29 days of such leave from 10‑1‑1982 to 7‑2‑1982. It seems to me that the ground of rejection is absolutely immaterial and all that has to be seen is that the leave was applied for and refused. It is, further, to be seen that, at the time when leave was applied for, admittedly, as brought out in evidence, more than 90 days' leave stood accumulated to the credit of the applicant, which would become encashable the moment it is refused, for such is the effect of sub‑rules (1) and (2) of rule 44, aforesaid, real together.

10. As to rule 45, in the above‑said Rules, all that needs be said is that such rule does not prohibit payment of leave salary, in lieu of earned leave but merely provides that once a notice of termination has been served, from either side, no further leave would be earned. The word "earned" in the context does not have the same meanings and connotations and is not the same thing as "encashed" and whatever leave was earned before would not cease to be encashable, merely, because of the service of a notice of termination by the employer or the employee. Such rule 45, therefore, does not make the slightest difference to the interpretation of rule 44 as arrived at here.

11. Now, the contention of Mr. Azhar Ali is, as was advanced before the learned two Courts below, that, on the factual plane, no period whatever was available, in view of service of notice by way of resignation by the applicant himself and, therefore, the refusal has come about per force of circumstances. In the first place, such factual premises does not seem to be relevant, as the refusal was made, not on account of non‑availability of the period in service but on an altogether different basis namely, that the applicant had already availed of 29 days' leave from 10‑1‑1982 to 7‑2‑1982. Irrespective of the relevancy of such ground and the fact remaining that this ground is not the same as has been used by way of defence, even otherwise, no different result on such score can follow. In other words, assuming the ground was a different one and that, in fact, the requisite period of service, within which the leave could be availed of, was not available, then, too, the argument would not hold. As I have said earlier, whereas there is embargo that accumulated leave cannot be encashed while an employee continues to be in service, there does not seem to be any condition, express or implied, that such a benefit cannot be claimed after termination of service and after the relationship has come to an end, for that implication cannot be read in the rule. Even if that were not so, admittedly, a resignation would come into effect, as per the same Rules of Service, from the date of its acceptance and it is conceded on the part of all concerned that even though the applicant had applied to be relieved, immediately, the requisite period of such notice, from either side, is 90 days. Therefore, on 8‑2‑1982, when leave was asked for and refused, speaking technically, on the basis of notice of resignation dated 17‑1‑1982, there was a period of more than two months upto which the employee was expected to serve. The resignation could be accepted following upon the afflux of the leave period. As it turned out to be, PASMIC accepted the resignation w.e.f. 17‑2‑1982 but for the remaining period of two months 60 days took, in lieu, from the applicant sums equal to two months' pay, which, in fact, the applicant, as reflected above, had sought to be adjusted against his accumulated leave, in the context of such notice itself. However, what PASMIC did was veritably to give by one hand to take away with the other, in that, while they allowed resignation to be effective from 17‑2‑1982, they disallowed encashment of leave and took away payments equal to two months' of the remaining period of notice. This I am afraid, being in the nature of simultaneous approbation and reprobation, could not be done.

12. Even if what is contended by Mr. Azhar Ali is accepted, which, for reasons that I have indicated above I cannot, an employee is to remain in service even after submission of his resignation and till such time as that resignation is not accepted and upto the date on which the acceptance becomes effective. In the instant case, the applicant applied for grant of earned leave for a period of 90 days, of course, while his resignation was pending consideration but, obviously, at a time when termination from his side, on acceptance by the other, had not become effective. He was therefore, in service and because leave was refused to him as observed above on 8‑2‑1982 he immediately became entitled to encashment thereof against equivalent salary.

13. Mr .M. M. Mehmoodi has referred to a memorandum dated 1‑9‑1982 (Exh. P/6) Which even though later in time than the period of service of the applicant spells out, if I may say so, correctly, that where salary in lieu of leave is to be allowed the basis has to be not the basic salary but salary, together with all relevant emoluments. On the other hand, as regards discriminatory conduct, Mr. M. M. Mehmoodi has referred to the case of Mr. S. R. Khan, Ex‑Manager (Accounts), as reflected in Exh. P/7, dated 22‑2‑1983, whereunder encashment of 15 days' earned leave was allowed to the said S. R. Khan after his release from service, even though he had not applied for such encashment and refused while he was in service. The matter of substance is that the encashment was permitted, while he was no longer an employee of PASMIC. It is correct that such encashment was made, purportedly, on compassionate grounds but that really is not material, the fact remaining that no different interpretation was put to the rules, as has been accorded here. Viewed from this angle, there may be an element of discrimination in relation to the applicant.

14. On all the foregoing premises, the applicant was entitled to encashment of 90 days' leave against equivalent salary.

15. In the result, the order of the lower appellate Court is set aside but, at the same time, the judgment and decree of the trial Court is re‑affirmed but only to the extent of the principal amount and not in the context of grant of interest, the later part of which claim is not pressed by Mr .M. M. Mehmoodi. Revision Application allowed, as aforesaid, and the grant to carry costs throughout. M.BA./T‑89/K Order accordingly.