In a significant ruling, the Bombay High Court has affirmed that leave encashment is akin to a salary, which constitutes property under the law. The court stated that depriving a person of this property without statutory provision violates Article 300A of the Constitution, which ensures no person is deprived of property without legal authority.
This decision came in response to a case involving former employees of Vidarbha-Konkan Gramin Bank, who were denied leave encashment.
The bench, comprising Justices Nitin M Jamdar and M M Sathaye, passed the judgement in a plea filed by Dattaram Atmaram Sawant and his wife Seema. The couple, who resigned after over 30 years of service in 2015 and 2014 respectively, had accumulated significant amounts of leave—Dattaram with 250 days and Seema with 210 days. Despite their resignations, they were not granted leave encashment by the bank.
The court noted that Wainganga Krishna Gramin Bank had amalgamated with Vidarbha-Konkan Gramin Bank in 2013, leading to new regulations. However, the bank claimed that the leave encashment facility only came into effect in September 2015, after the couple had resigned.
The court dismissed this argument, stating that the 2015 circular did not create a new right but merely reiterated existing legal provisions.
Furthermore, the court ruled that if an employee has accumulated leave, the right to encash it becomes an entitlement. The bench deemed the bank’s refusal to allow the encashment of privilege leave as “arbitrary” and directed the bank to pay the amount due, with an interest rate of six per cent annually, within six weeks.
The Sawants argued their dues amounted to over Rs 10 lakh. The court observed that leave encashment is recognised as a right, which can only be restricted by a statutory provision. The bench ruled that the bank’s refusal based on the timing of the circular was unfounded, and the petitioners were entitled to the encashment of their privilege leave.
