Leave encashment is akin to salary, and depriving a person of leave encashment would amount to a violation of constitutional rights, the Bombay High Court recently held in the case of Dattaram Sawant & Anr v. Vidarbha Konkan Gramin Bank.
A bench of Justices Nitin Jamdar and MM Sathaye observed that leave encashment, like salary, is akin to property. If an employee has chosen to accumulate earned leave, then encashment becomes their right.
“Leave encashment is akin to a salary, which is property. Depriving a person of their property without any valid statutory provision would violate Article 300A of the Constitution of India. Leave encashment paid for unutilized leave is not a bounty. If an employee has earned it and chosen to accumulate it, then encashment becomes their right,” the Court held.
The case was brought by two employees, Dattaram Sawant and Seema Sawant, who sought encashment of privilege leave that was rejected by their employer, Vidarbha Konkan Gramin Bank.
Both employees had worked with the bank for over 30 years before resigning. Their superiors accepted their resignations and issued experience certificates.
According to bank regulations, employees were entitled to privilege leave accumulating at one day for every 11 days of service. Dattaram Sawant had 250 days of privilege leave, amounting to ₹6,57,554, while Seema Sawant had 210 days, amounting to ₹4,66,830.
When the petitioners requested encashment of their privilege leave, the bank informed them that the facility for encashment for those who had resigned was only established on September 14, 2015, after they had resigned.
Aggrieved, the petitioners moved the Court, seeking directions for the bank to pay the amounts of privilege leave with 8% interest per annum.
The Court opined that the accrued right to encash privilege leave could not have been rejected by the bank.
“The refusal by the Respondent-Bank to extend the benefit of encashment of privilege leave is arbitrary and cannot be sustained. 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 6% per annum and pay the same to the Petitioners within six weeks from today,” the Court ordered.
Advocates Shailendra Kanetkar and Yash Dhawal represented the petitioners. Advocates Bhavesh Wadhwani and Shrishti Shetty, briefed by MV Kini & Co, represented the bank.
