Justice M. Nagaprasanna of the High Court of Karnataka made these observations while allowing a petition filed by G. Linganagouda, who has been dismissed from service by his employer, Pragathi Krishna Gramina Bank, Kampli, in Hosapete taluk of Vijayanagara district.
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The right to leave encashment is like the right to property, earned by an employee, and leave encashment cannot be denied even to an employee dismissed from service on the charge of misconduct, including those working in gramin banks, unless the law permits forfeiture, the High Court of Karnataka has said.

“The leave encashment is a right of an employee not only under the statute, even under the fountainhead of all statutes — the Constitution of India,” the court said while clarifying that the right to encashment could only be curtailed by another statutory provision empowering the employer to forfeit or withhold it.

Justice M. Nagaprasanna made these observations while allowing a petition filed by G. Linganagouda, who has been dismissed from service by his employer, Pragathi Krishna Gramina Bank, Kampli, in Hosapete taluk of Vijayanagara district.

The petitioner had questioned the decision of the bank, which had rejected his plea for encashment of his 220 days of privilege leave. The bank, citing its service regulation of 2013, had said that its Regulation 67 would not permit payment of leave encashment to an employee who has been dismissed from service.

Statutory right

“Benefit of leave encashment to an employee is a statutory right, but it has an imprimatur to the legal principle that the right to receive terminal benefits is recognised as a right to property as per Article 300A of the Constitution of India,” the court said.

Citing interpretation of similar service regulations in the gramin banks by the Bombay High Court and the High Court of Madhya Pradesh, Mr. Justice Nagaprasanna pointed out that both these High Courts have held that the privilege leave available to the employee is akin to the property under Article 300A of the Constitution and therefore cannot be taken away unless the statute so permits.

The court said that though Regulation 67 states that all leave shall lapse when an employee ceases to be in employment of the bank by any mode, it does not mean the right already accrued for encashment would lapse.