Supreme Court Upholds Partial Refund for Uncompleted PhD Study Leave: Sant Longowal Institute vs. Suresh Chandra Verma (2013)

Introduction

Date of the Judgment: 18 July 2013

Citation: (2013) INSC 524

Judges: K.S. Radhakrishnan, J., Pinaki Chandra Ghose, J.

Can an employee be compelled to refund their entire salary if they fail to complete a PhD program during a study leave? The Supreme Court of India addressed this question in a case involving an engineering institute and a lecturer who could not finish his doctoral studies. The court examined the terms of the bond and the relevant service rules to decide if the institute could recover the full amount of salary and benefits paid to the employee during his study leave. The bench comprised Justices K.S. Radhakrishnan and Pinaki Chandra Ghose.

Case Background

The Sant Longowal Institute of Engineering and Technology (the appellant), a centrally funded institution, employed Suresh Chandra Verma (the respondent) as a lecturer in Mechanical Engineering starting August 30, 1993. The respondent was granted three years of study leave to pursue a PhD at IIT Kanpur, from July 24, 1999, to July 22, 2002. He executed a bond before proceeding on leave.

The respondent could not complete his PhD within the given time. He rejoined the institute in November 2003. The institute asked him to produce his PhD completion certificate. Since he could not, the institute demanded a refund of Rs. 12,32,126, the amount paid to him as salary and allowances during his study leave.

Timeline

Course of Proceedings

The respondent challenged the institute’s demand for a refund by filing a Civil Writ Petition No. 12555 of 2010 in the High Court of Punjab and Haryana. A single judge allowed the writ petition on February 2, 2012, quashing the demand notice and ordering a refund of the recovered amount with interest.

The institute appealed the decision before a Division Bench of the same High Court. The Division Bench dismissed the appeal on August 23, 2012, stating that the bond did not explicitly require the respondent to complete his PhD within three years. The court noted that the bond only stipulated that the respondent had to serve for six years after rejoining.

Legal Framework

The case references the Central Civil Services (Leave) Rules, 1972, specifically Rule 63, which deals with resignation or retirement after study leave or non-completion of the course of study. Rule 63(1) states:

“If a Government servant resigns or retires from service or otherwise quits service without returning to duty after a period of study leave or within a period of three years after such return to duty or fails to complete the course of study and is thus unable to furnish the certificate as required under sub-rule (5) of Rule 53 he shall be required to refund- (i) The actual amount of leave salary, study allowance, cost of fees, travelling and other expenses, if any, incurred by the Government of India; and (ii) The actual amount, if any, of the cost incurred by other agencies such as foreign Government, Foundations and Trusts in connection with the course of study, together with interest thereon at rates for the time being in force on Government loans from the date of demand, before his resignation is accepted or permission to retire is granted or his quitting service otherwise.”

The court noted that while the institute operates under the Central Civil Services (Leave) Rules, 1972, the bond executed by the respondent did not explicitly mention Rule 63 or any condition requiring a refund if the PhD was not completed.

Arguments

Appellant’s Arguments:

• The High Court misinterpreted the terms of the bond executed on May 5, 1999.
• The principle of “no work no pay” should apply since the respondent did not work at the institute during his study leave and did not obtain a PhD.
• The institute, the respondent, and the students did not benefit from the expenditure of public money.

Respondent’s Arguments:

• He completed the coursework and comprehensive examination for the PhD.
• His thesis could not be completed due to his guide’s retirement.
• He requested a six-month extension on May 24, 2002, and June 4, 2002, which was not addressed.
• Another employee, Abanish Kumar Singh, was granted an extension, but he was not.
• The bond does not state that a refund is required if he fails to complete the PhD.
• The High Court correctly interpreted the bond’s terms.

Issues Framed by the Supreme Court

The Supreme Court considered the following issue:

1. Whether the appellant-institute is justified in directing the respondent to refund the entire amount of Rs.12,32,126/- paid to him towards salary and other allowances for pursuing Ph.D studies at IIT, Kanpur, on failure to produce the certificate of obtaining the Ph.D, for which study leave was granted.

Treatment of the Issue by the Court

Authorities

The court considered the following legal provisions:

• Central Civil Services (Leave) Rules, 1972, Rule 63: This rule outlines the conditions under which a government servant must refund expenses related to study leave if they fail to complete the course or do not return to duty.

Judgment

The Supreme Court modified the High Court’s judgment. The court acknowledged that the bond executed by the respondent did not explicitly state that a refund was required if he did not complete his PhD. However, the court also noted that public interest suffered because the respondent did not complete his PhD despite receiving salary and benefits during his study leave.

The court noted that the institute had already recovered Rs. 6,50,000 from the respondent. The court decided that the institute could retain the recovered amount, but could not recover the remaining Rs. 6,18,000.

What weighed in the mind of the Court?

The court’s decision was influenced by a balance of factors. While the bond was vague and did not explicitly require a refund for non-completion of the PhD, the court recognized that public funds were used to support the respondent’s study leave. The court also considered that the respondent did not complete his PhD, thus not benefiting the institute and its students as intended. The court’s decision to allow the institute to retain the recovered amount, but not to recover the remaining amount, reflects a balance between contractual obligations and public interest.

The court’s reasoning was based on the following:

• The bond did not explicitly require a refund if the PhD was not completed.
• Public money was spent on the respondent’s study leave.
• The respondent did not complete his PhD, which was the purpose of the study leave.

The court considered the arguments of both sides and decided that it would be unfair to make the respondent pay the remaining amount.

The court quoted from the judgment:

“We notice there is no clear cut provision in the bond either expressly referring to Rule 63 or strictly imposing a condition that if a candidate fails to complete the course study during the period of sanctioned leave, he will have to refund to the appellant-institute the total amount of leave, salary and other benefits availed of by him during the period of study leave.”

“A candidate who avails of leave but takes no interest to complete the course and does not furnish the certificate to that effect is doing a disservice to the institute as well as the students of the institute.”

“Considering the facts and circumstances of the case and considering the fact that the bond executed by the respondent is found to be vague, we find no reason for the appellant-institute to recover the balance amount of Rs.6,18,000/- from the respondent but the amount already recovered be not refunded, since public interest has definitely suffered due to non-obtaining of Ph.D by the respondent after availing of the entire salary and other benefits.”

Key Takeaways

• Educational institutions should have clear and specific clauses in bonds regarding the consequences of not completing study leave programs.
• Public interest is a significant factor in cases involving the use of public funds for employee development.
• Courts may take a balanced approach, considering both contractual obligations and public interest.
• Employees should be diligent in completing their study programs within the stipulated time.

Directions

The Supreme Court directed that no further amount be recovered by the appellant-institute from the respondent. The amount already recovered was not to be refunded.

Development of Law

The ratio decidendi of this case is that while a bond is a contract, the court will also consider the public interest involved. The court held that in cases where an employee does not complete the course for which study leave was granted, the institute cannot recover the entire amount if the bond is not specific on the point, but the amount already recovered can be retained by the institute. This case clarifies that the terms of the bond must be clear and specific. It also underscores the importance of public interest in such matters.

Conclusion

The Supreme Court’s decision in Sant Longowal Institute vs. Suresh Chandra Verma provides clarity on the issue of refund of salary and allowances for uncompleted study leave. While the court acknowledged that the bond was vague and did not explicitly require a refund, it also recognized that public interest had suffered due to the non-completion of the PhD. The court’s decision to allow the institute to retain the recovered amount, but not to recover the remaining amount, reflects a balanced approach that takes into account both contractual obligations and the public interest.