Leave Encashment Is Not A Bounty; But A Right Of Employee: Bombay High Court

The petitioners approached the court seeking encashment of their privilege leaves, which their employer, Vidarbha Konkan Gramin Bank, had rejected. Both individuals had dedicated over three decades to the bank before tendering their resignations, which were accepted by their superiors who issued them experience certificates.

A Division Bench of Justice Nitin Jamdar and Justice MM Sathaye held, “Leave encashment is akin to a salary, which is property. Depriving a person of his property without any valid statutory provision would violate Article 300 A of the Constitution of India. Leave encashment paid on account of unutilised leave is not a bounty. If an employee has earned it and the employee has chosen to accumulate his earned leave to his credit, then encashment becomes his right.”

Advocate Shailendra Kanetkar appeared for the Petitioners and Advocate Bhavesh Wadhwani appeared for the Respondent.

According to the bank's regulations, employees were entitled to one day of privilege leave for every 11 days of duty. Dattaram Sawant claimed 250 days of credited privilege leave amounting to ₹6,57,554, while Seema Sawant asserted 210 days of credited privilege leave, equivalent to ₹4,66,830.

Upon requesting encashment, the petitioners were informed by the bank that the facility for encashment of privilege leave for resigning employees had been established only after their resignation dates, thus denying them the benefit.

The Court deemed the denial of encashment arbitrary and unsustainable, asserting that the accrued right of encashment could not be dismissed by the bank. Consequently, it said, “The refusal by the Respondent -Bank to extend the benefit of encashment of privilege leave is arbitrary and cannot be sustained. 23. Thus, it is declared that the Petitioners are entitled to leave encashment as prayed for. The Respondent – Bank is directed to calculate the amounts payable towards encashment to the Petitioners along with interest at the rate of Rs.6% per annum and pay the same to the Petitioners within six weeks from today”

Cause Title: Dattaram Sawant & Anr. v. Vidarbha Konkan Gramin Bank, [2024:BHC-AS:20584-DB]

Appearance:

Petitioners: Advocates Shailendra Kanetkar and Yash Dhawal

Respondent: Advocates Bhavesh Wadhwani and Shrishti Shetty, briefed by MV Kini & Co.

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