Delhi District Court
M. L. Mahajan vs . Punjab National Bank & Another on 10 June, 2016
M. L. Mahajan vs. Punjab National Bank & Another
IN THE COURT OF DR. AJAY GULATI, ADDL. DISTRICT
JUDGE, ROOM NO. 606, SAKET COURTS, SOUTH DISTRICT,
NEW DELHI
In the matter of
Suit No.112/16
Case ID No.02406C0265732010
M. L. Mahajan
Chief Manager (Dismissed)
Punjab National Bank
R/o 295, Ambika Vihar,
Paschim Vihar,
New Delhi110087.
................Plaintiff
Versus
1. Punjab National Bank
(A Government of India Undertaking)
Through its
Chairman & Managing Director
Head Office 7, Bhikaji Cama Place,
New Delhi.
2. Punjab Nation Bank Employees's Provident
Fund Trust
Through
its Chairman
Punjab National Bank
Rajendra Bhawan, Rajendra Place,
New Delhi.
.............Defendants
Suit No. 112/16 Page 1 of 37
M. L. Mahajan vs. Punjab National Bank & Another
Date of Institution : 09.08.2010
Date of reserving the judgment: Oral
Date of pronouncement : 10.06.2016
Decision : Partly decreed
SUIT FOR DECLARATION & MANDATORY INJUNCTION
JUDGMENT
1. The present suit was filed by the plaintiff, who was a Chief Manager in the erstwhile New Bank of India (eNBI) seeking to recover the employer's share i.e. contribution in the CPF of the plaintiff, which has been forfeited by the defendant No.1 pursuant to the dismissal from the service of the plaintiff.
FACTUAL NARRATION
2. As per the averments in the plaint, the plaintiff was working as a Chief Manager in the New Bank of India, which was later on amalgamated with Punjab National Bank vide Government of India Notification No. 4993 dated 04.09.1993. Pursuant to the amalgamation, the plaintiff became an employee of the Punjab National Bank and was thereafter covered by the Service Rules applicable to the Punjab National Bank employees.
Suit No. 112/16 Page 2 of 37M. L. Mahajan vs. Punjab National Bank & Another
3. On 13.01.1996, the plaintiff was dismissed from the service for irregularities committed by him in the tenure as Sr. Manager of the erstwhile Bank (eNBI) for the period 18.10.1985 to 24.06.1989. The dismissal order was passed pursuant to a regular disciplinary enquiry held against the plaintiff in which he did not participate despite being given a number of opportunities. The order of dismissal of the plaintiff's services was upheld by the Hon'ble Delhi High Court. The SLP preferred by the plaintiff against the judgment of Hon'ble Delhi High Court was also dismissed. The allegations of irregularities committed by the plaintiff were levelled specifically with regard to the following four loan accounts:
1) M/s U. K. Engg. Pvt. Ltd.
2) M/s Sona Super Insulation
3) M/s Raja Sons
4) M/s Sona Machines & Engg. (India) (P) Ltd
4. The chargesheet which was issued alleged that due to the lapse on the part of the plaintiff, the realization of an amount of Rs.32.25 Lakhs given as loan by eNBI fell into jeopardy. However, it is the contention of the plaintiff that not only did he take sufficient securities from the borrowers, it was due to these very securities that the defendant No.1 was able to arrive at a Suit No. 112/16 Page 3 of 37 M. L. Mahajan vs. Punjab National Bank & Another compromise/settlement with the borrowers and the loan accounts stood adjusted to the satisfaction of the defendant No.1. The plaintiff further contended that even the defendant bank i.e. defendant No.1 had advanced loan to M/s U. K. Enterprises Pvt. Ltd. prior to amalgamation of eNBI with Punjab National Bank and whose loan account and securities were merged with the securities taken by eNBI. Consequently, as a result of the compromise with the borrowers, the defendant No.1 ('Bank') did not suffer any financial loss.
5. In para10 of the plaint, the plaintiff specifically mentioned that his application under the Payment of Gratuity Act 1972 for release of his gratuity amount was allowed by the competent authority and it was specifically observed in the order dated 14.08.2007 passed by the Controlling Authority that the 'Bank' did not suffer any financial loss as a result of the acts of the plaintiff. The said order was upheld by the Appellant Authority and the gratuity was released to the plaintiff. However, 'Bank' challenged the orders of the Competent Authority and the Appellant Authority by way of a Civil Writ Petition which is still pending in the Hon'ble Delhi High Court.
6. The plaintiff was informed about the forfeiture of employer's contribution in his CPF account by way of a Suit No. 112/16 Page 4 of 37 M. L. Mahajan vs. Punjab National Bank & Another reply, when he moved an application under the RTI Act.
Prior to submitting an application under the RTI Act, plaintiff had submitted a Representation on 14.12.2009 regarding the status of employer's contribution to his CPF (employee's own contribution in his CPF account had already been paid i.e. to the plaintiff) but since no action was taken on his representation, the plaintiff filed an application under the RTI Act. In response to the application under the RTI Act, he was informed that the defendant No.1 has forfeited the employer contribution to the CPF Account of the plaintiff amounting to Rs.1,99,496.97/. Information supplied to the plaintiff reads as under:
"Bank's contribution of Provident Fund was sent to the erstwhile Zonal Office, Delhi on 04.04.2008 vide cheque No.015238 dated 15.03.2008 for Rs.199496.97 on receipt of recommendation from erstwhile Zonal Office, Delhi for appropriation towards loss suffered by the bank, in terms of Board's approval."
7. Consequently, the plaintiff filed the present suit seeking a declaration to the effect that the approval granted by the Board of the defendant Bank for forfeiture Suit No. 112/16 Page 5 of 37 M. L. Mahajan vs. Punjab National Bank & Another of the contribution of the Bank in the CPF account of the plaintiff be declared as null and void along with a prayer for issuing mandatory injunction to the defendant to release the bank's contribution in plaintiff's CPF account alongwith interest. The plaintiff has sought interest on the bank's contribution in the CPF account from the date of his suspension i.e. 14.05.1993 till its realization by the plaintiff.
8. In response, the defendants filed their separate Written Statements. It is submitted by the defendant No.1 that the approval by the Board of defendant bank dated 19.02.2008 for forfeiture of the 'Bank's' contribution in CPF account of the plaintiff was given in terms of PNB Employees Provident Fund Trust Rules. The said approval by the Board of the defendant Bank was given on a Note prepared by the Board dated 02.02.2008. The said Board Note clearly mentions that substantial loss amounting to Rs.72,83,502.60/ had been suffered by the bank due to the irregularities committed by the plaintiff. Therefore, defendant No.1 contended that plaintiff's claim that defendant bank had not suffered any financial loss due to his official acts is wholly without basis.
9. The above said Board Note gives details of the loss suffered by the bank which are mentioned in the Suit No. 112/16 Page 6 of 37 M. L. Mahajan vs. Punjab National Bank & Another preliminary objection of the Written Statement filed by defendant No.1. It was specifically averred that Rs.2,15,695/ was to be recovered from M/s Sona Super Insulation whereas remaining two loan accounts of M/s UKG Engg. Pvt. Ltd. and M/s Sona Machines & Engg. India (P) Ltd. had caused a loss of Rs.70,67,807.60/, as a result of the compromise entered into by the bank with the said entities. Consequently, relying on Rule13 of the PNB Employees Provident Fund Trust Rules, the bank's contribution to the CPF account of the plaintiff was forfeited. Rule 13 of the above said Rules is reproduced below:
"The Bank shall have first lien on the contribution made by it to the individual account of any member together with interest thereon or accretions thereto, to recover any loss, damages and liabilities which the Bank may at any time sustain or incur by reasons of any dishonest act, deed or omission or gross misconduct of or by such member."
10. On merits, it was admitted by the defendant No.1 that compromise had been entered into by the Bank with Suit No. 112/16 Page 7 of 37 M. L. Mahajan vs. Punjab National Bank & Another defaulting borrowers. It was averred that out of four loan accounts only one loan account of M/s Raja Sons stood adjusted whereas other three accounts resulted in loss to the defendant bank, as already mentioned above. It was clarified by the 'Bank' that entering into a compromise by the 'Bank' is only a means to minimize the losses and that entering into a compromise did not by any logic mean that the dues had been realized by the bank to its satisfaction. Regarding the order passed by the Controlling Authority under the Payment of Gratuity Act, 1972, it was submitted by defendant No.1 that since they have challenged the order of release of gratuity to the plaintiff before the Hon'ble Delhi High Court, the observation made in the said order to the effect that the bank had not suffered any financial loss due to the acts of the plaintiff, has not attained finality.
11. The plaintiff filed replication wherein the plaintiff relied on his cross examination before the Competent Authority under the Payment of Gratuity Act, 1972. In the said cross examination, no suggestion was given to the plaintiff by the defendant Bank that the acts or alleged irregularities of the plaintiff had caused a loss to the defendant Bank. It was further specified in the replication that the inspection reports of the loan accounts Suit No. 112/16 Page 8 of 37 M. L. Mahajan vs. Punjab National Bank & Another in question reveal that the bank had sufficient securities with it for realization of the loan and had they been disposed off in time, the bank would have been able to realize the amount more than the entire outstanding against the defaulters. Thus, the plaintiff reiterated its earlier stand that the defendant Bank did not have to enter into a compromise, when the securities were available with it to enforce the loan account.
12. The total amount claimed in the present suit is Rs.6,40,050/. The breakup of the claimed amount is as under:
1. Bank contribution towards CPF Account: Rs.1,99,496.97/
2. 12% interest on the aforesaid amount from March, 1993 to 04.04.2008
3. 18% interest from 04.04.2008 till the realization of the amount along with pendentelite and future interest.
13. Vide order dated 19.07.2011, Learned Predecessor Judge framed the following issues for adjudication by the Court:
1. Whether Shri Ashwani Kumar Sharma, Deputy Manager of defendant no.1/PNB (erstwhile New Bank of India) is competent and authorized to sign and verify the written statement for defendant no.1, if not, its Suit No. 112/16 Page 9 of 37 M. L. Mahajan vs. Punjab National Bank & Another consequences? OPD
2. Whether the suit is within time prescribed by law? Onus on Parties
3. What were the securities, its worth qua account of M/s UKG Engg (P) Ltd. & its sister concern vizavis outstanding amount in account of M/s UKG Engg. (P) Ltd., at the time of transfer of plaintiff from Branch at 'L' Block, Cannaught Place, New Delhi of defendant no.1 (erstwhile New Bank of India)? Onus on Parties
4. Whether the defendant suffered losses of Rs.72,83,502.60p because of lapses on the part of plaintiff? BPD (Burden to prove on defendants)
5.(a) Whether the Bank/defendant's contribution of Provident Fund of plaintiff was in trust with defendant no.2? OPP
(b) Whether the plaintiff's Bank's Contributory Provident Fund has been forfeited by the defendant with Board Resolution dated 02.02.2008 and in terms of Rule 13 of PNB Employees Provident Fund Trust Rules? OPD (6) Whether the plaintiff is entitled for decree of declaration against defendants, as prayed in Suit No. 112/16 Page 10 of 37 M. L. Mahajan vs. Punjab National Bank & Another clause 1 of prayer clause? OPP (7) Whether the plaintiff is entitled for decree of mandatory injunction against the defendants to make payment of Bank contribution to Provident Fund of the plaintiff for a sum of Rs.6,40,055/ (i.e. Rs.1,99,497/ to contribution + Interest of Rs.4,40,558/)? BPP (Burden to prove on plaintiff) (8) Whether the plaintiff is entitled for interest @ 18% per annum, pendentelite and future, against the defendants? OPP (9) Relief EVIDENCE ADDUCED On behalf of the plaintiff
14. Apart from examining himself as PW1, plaintiff examined 7 other witnesses, all of whom were employees of the defendant No.1 except PW8. Each of the employees of defendant No.1 who were examined as PWs were examined with a view to ascertain or elicit whether the loans advanced to subsequent loan defaulters i.e. U. K. Gupta Engineering Pvt. Ltd., M/s Sona Super Insulation, and M/s Sona Machines and Engineerings Pvt. Ltd. were Suit No. 112/16 Page 11 of 37 M. L. Mahajan vs. Punjab National Bank & Another covered by sufficient securities at the time when the plaintiff left his assignment as Sr. Manager, LBlock, Connaught Place, New Delhi. In addition to these witnesses, plaintiff also relied on a number of documents, the relevant ones being as follows:
1. PW1/1 is the amalgamation scheme dated 04.09.1993 of erstwhile NBI with PNB;
2. PW1/2 is the order dated 13.01.1996 of the disciplinary authority who imposed the punishment of dismissal from the service of plaintiff since he had by his lapse of official duties, put recovery of Rs.32.25 Lakhs of the Bank in jeopardy.
3. PW1/3 is the copy of the chargesheet dated 11.03.1992 issued to the plaintiff which contained the following charges: (i) that the plaintiff failed to ensure and protect the bank interest; (ii) he failed to discharge his duties with due diligence, devotion, integrity and honesty; (iii) he acted otherwise than in his best judgment in performance of his duties; and (iv) he acted in a manner unbecoming of an officer of the bank.
4. PW1/4 is the compromise dated 29.04.2002 arrived at between the defendant No.1 with UKG Engg. Pvt Ltd. and other group companies for Rs.146 Lakhs;
5. PW1/5 is the revised one time settlement offer Suit No. 112/16 Page 12 of 37 M. L. Mahajan vs. Punjab National Bank & Another dated 08.11.2002 with UKG Engg. Pvt Ltd. and other group companies;
6. PW1/6 is the order dated 14.08.2007 of the controlling authority under the Payment of Gratuity Act;
7. PW1/7 is the order dated 27.03.2008 passed in appellate proceedings against the order dated 14.08.2007 (Ex.PW1/6);
8. PW1/11 is the representation of the plaintiff dated 14.12.2009 submitted to the defendant No.1 to release the bank's share/contribution in the CPF account of the plaintiff;
9. Ex.PW1/12 is the application submitted by the plaintiff under the RTI Act regarding the status of Ex.PW1/11;
10. Ex.PW1/13 is the reply received by the plaintiff under the RTI Act;
11. Ex.PW1/D1 is the PNB Employees Provident Fund Trust Rules.
12. Ex.PW3/1 (colly.) is the proposal of settlement/compromise of the loan accounts of UKG Engg. Pvt ltd., Sonia Machines and Engg. Pvt Ltd. and Sonia Insulation.Suit No. 112/16 Page 13 of 37
M. L. Mahajan vs. Punjab National Bank & Another
15. The gist of the examination of PW1 to PW8 is reproduced below: Examination of the plaintiff i.e. PW1: Plaintiff filed his affidavit A1 wherein he deposed on oath about the averments made in the plaint. In his cross examination, plaintiff admitted that there were 4 main loan accounts in respect of which he had been chargesheeted i.e.
1. M/s U. K. Eng. Pvt Ltd.
2. M/s Sona Super Insulation
3. M/s Raja Sons
4. M/s Sona Machines & Engg (India) Ltd.
However, he denied the suggestion that loans were sanctioned since Sh. U K. Gupta was a director or a partner in the 4 firms mentioned above and he was brotherinlaw of Sh. C. J. Arora, who worked as a Manager under the plaintiff. He exhibited chargesheet as Ex.PW1/3, which contained charges of serious lapses/irregularities and acts of omission committed by the plaintiff and PNB Employees Provident Fund Trust Rules as Ex.PW1/D1. The plaintiff consistently maintained his stand that no loss has been caused to the Bank on account of insufficiency of securities.
PW2: Sh. S. K. Gupta, Manager PF and Pension Fund Department, PNB was examined as PW2. He brought the Suit No. 112/16 Page 14 of 37 M. L. Mahajan vs. Punjab National Bank & Another Punjab National Bank Employee's Provident Fund Trust Rules and exhibited plaintiff's Provident Fund Settlement Record as Ex.PW2/1. He, on court question, replied that the forfeited amount was Rs.1,99,496.97/. He deposed that he has no knowledge whether any notice with regard to forfeiture having been issued to the plaintiff prior to order of forfeiture. He further deposed that plaintiff adopted PF contribution and not for pension scheme. He also deposed that after cessation of from service, an employee is paid interest by the Trust (defendant No.2) for 3 months only.
PW3 - Sh. R. B. Meena, Sr. Manager, PNB was examined as PW3, who brought the proposal for settlement/compromise account of M/s UK Engg. (P) Ltd., M/s Sona Machine and Engg (P) Ltd., and M/s Sona Insulation as Ex.PW3/1 (colly). He deposed that the accounts of eNBI and PNB were merged after amalgamation and it was not possible to say as to how much amount was outstanding in account of eNBI and how amount was adjusted. He deposed that when accounts were merged, securities were also merged. He further deposed that the proposal form for compromise does not mention as to how many securities were available with the Suit No. 112/16 Page 15 of 37 M. L. Mahajan vs. Punjab National Bank & Another Bank when the plaintiff was transferred from Branch office at LBlock. However, he was not cross examined.
PW4 - Sh. K. K. Heda, Sr. Manager, PNB RTI Cell was examined as PW4. He deposed regarding RTI application moved by plaintiff and exhibited the RTI application of the plaintiff as Ex.PW1/12, & reply of the Bank as Ex.PW1/13. This witness was also not cross examined.
PW5 - Sh. R. K. Nanda, Manager, PNB Inspection & Audit Department was examined as PW5. He exhibited the letter dated 16.01.2008 as Ex.PW5/A on the basis of which Board Note dated 02.02.2008 was prepared. He deposed that the letter dated 16.01.2008 does not mention as to what were the outstanding in the accounts of eNBI and valuation of the securities on the date when the plaintiff was relieved from the Branch. He further deposed that no letter/material was placed before the Board except letter dated 16.01.2008 i.e. for the consideration of the Board while deliberating on the Note dated 02.02.2008 regarding forfeiture of Employer's contribution in the CPF account of plaintiff. However, he was also not cross examined.
PW6 - Sh. Rajiv Dogra, Sr. Manager, PNB was examined Suit No. 112/16 Page 16 of 37 M. L. Mahajan vs. Punjab National Bank & Another as PW6 on 17.04.2012. He deposed that no record pertaining to loan account of the concerned 4 accounts were available as office records older than 15 years had been destroyed. This witness was also not cross examined.
PW7 - Sh. A. K. Sharma, AGM, PNB was examined as PW
7. He did not bring the summoned record with regard to deptt proceedings of chargesheet dated 11.03.1992. He deposed that he could not say as to why Bank's Contribution of plaintiff's CPF account was forfeited. He was not cross examined as no one had appeared on behalf of defendant.
PW8 - Sh. Ajay Kumar Pandey o/o Regional Labour Commissioner was examined as PW8. He proved the orders passed by Controlling Authority under the Payment of Gratuity Act 1972 for release of gratuity of plaintiff as Ex.PW1/6 and order passed by the Appellate Authority as Ex.PW1/7.
On behalf of defendant
16. Defendants in their evidence examined only one witness DW1 and relied on the following documents:
(1) Ex.DW1/1 is the Board Note dated 02.02.2008 Suit No. 112/16 Page 17 of 37 M. L. Mahajan vs. Punjab National Bank & Another vide which decision was taken to forfeit the Bank's contribution to the CPF account of plaintiff. It was approved on 19.02.2008;
(2) Ex.DW1/2 is the PNB Provident Fund Trust Rules.(3) Ex.DW1/3
17. The gist of the examination of DW1 is reproduced below: DW1 Sh. Ram Babu Meena, Sr. Manager, PNB was examined as DW1 by way of affidavit Ex.DW1/A and exhibited the Board Note dated 02.02.2008 approved on 19.02.2008 regarding the decision to forfeit the Bank's Contribution in the CPF account of the plaintiff as Ex.DW1/1 and an attested copy of statement of accounts of the defaulting borrowers alongwith certificate U/s 2A of Banker's Book Evidence Act as Ex.DW1/3. He also deposed that as per the Bank Note, Bank had suffered a loss as a result of compromise with 4 loan accounts as mentioned in the plaint as well as Written Statement. He deposed that the Bank suffered a net loss of Rs.70,67,807.60/ as a result of the compromise arrived at between Bank and defaulters. He further deposed that Rule 13 of the PNB Employee's Provident Fund Trust Rules was relied upon by defendant No.1 to forfeit the Bank's Contribution. He also Suit No. 112/16 Page 18 of 37 M. L. Mahajan vs. Punjab National Bank & Another deposed that ledger sheets of the accounts in which loss has been caused, tallies with the Board Note.
18. In his cross examination, DW1 deposed that he was not aware of the securities taken from the loan defaulters by plaintiff. He was not aware of the securities of loan defaulters with the 'Bank' when the plaintiff was relieved from the Bank Branch LBlock, Connaught Place, New Delhi and also not aware of the outstanding balance in the 4 loan accounts. Further, he was not aware whether the securities were sufficient to cover the same. However, importantly, he also admitted that the Bank (defendant No.1) was able to arrive at a compromise with the loan defaulters because of the securities taken by the plaintiff.
FINDINGS
19. I have heard the Learned counsel for the parties and have carefully gone through the material on record.
ISSUE NO.1 Whether Shri Ashwani Kumar Sharma, Deputy Manager of defendant no.1/PNB (erstwhile New Bank of India) is competent Suit No. 112/16 Page 19 of 37 M. L. Mahajan vs. Punjab National Bank & Another and authorized to sign and verify the written statement for defendant no.1, if not, its consequences?
20. The onus to prove this issue was on the defendant.
The general power of attorney dated 09.03.1994 of Sh. Ashwani Kumar Sharma was filed on 27.04.2011. However, the same has not been proved by the defendant by examining Sh. Ashwani Kumar Sharma or by leading any other evidence in this regard. Even DW1 did not say anything regarding this aspect in his affidavit. The plaintiff while appearing as PW1 did not raise any objection regarding the filing of Written Statement. Even while cross examining DW1, Learned counsel for the plaintiff did not put any question to him regarding Written Statement having been filed by an unauthorized person. Even though, the Written Statement was filed by an officer duly authorized, the fact that his authorization has not been duly proved would not render the Written Statement to be struck off or not be liable to read in evidence. Accordingly, the Written Statement will be read in evidence. This issue is thus decided in favour of the defendant.
ISSUE NO.2 Suit No. 112/16 Page 20 of 37 M. L. Mahajan vs. Punjab National Bank & Another Whether the suit is within time prescribed by law?
21. The onus to prove this issue was on the parties. The suit is within the time prescribed by law having been filed within 3 years of the reply received by the plaintiff under the RTI Act informing him of the forfeiture of part CPF Fund. Further, no objection was taken by the defendant in its Written Statement regarding the suit having been filed beyond the limitation period. Even during the examination of PW1 no question was specifically asked from the plaintiff regarding the suit being barred by limitation. Even at the stage of final arguments, no arguments were addressed on this issue by either side. Hence, this issue is decided in favour of the plaintiff.
ISSUE NO.3 What were the securities, its worth qua account of M/s UKG Engg (P) Ltd. & its sister concern vizavis outstanding amount in account of M/s UKG Engg. (P) Ltd., at the time of transfer of plaintiff from Branch at 'L' Block, Cannaught Place, New Delhi of defendant no.1 (erstwhile New Bank of Suit No. 112/16 Page 21 of 37 M. L. Mahajan vs. Punjab National Bank & Another India)?
22. For proving this issue, plaintiff himself entered into the witness box and deposed that he had taken sufficient securities from the loanees at the time of sanctioning the loan. He further deposed that at the time when he left the charge of branch of LBlock, New Delhi, sufficient securities stood furnished with the Bank to realize the loan amount of above mentioned loan accounts. However, he has not filed any documents to support his contention.
23. PW3 Sh. R. B. Meena, Sr. Manager, brought the documents relating to proposal for settlement/compromise of the loan accounts of M/s UKG Engg. Pvt. Ltd., M/s Sonia Machines and Engineerings Pvt. Ltd. and M/s Sona Super Insulation. The proposals for settlement were exhibited as Ex.PW3/1 (colly.). The said witness deposed that erstwhile NBI and PNB were merged and it was not possible to say as to how much amount, which was outstanding in the loan account of erstwhile NBI, was adjusted. He also deposed that accounts and securities of both the Banks were also merged. He deposed that the proposal form for compromise does not say as to how many securities were available with plaintiff when he was transferred from Branch office at LBlock, Connaught Place, New Delhi. This Suit No. 112/16 Page 22 of 37 M. L. Mahajan vs. Punjab National Bank & Another witness was not cross examined by the defendant.
24. PW5 deposed that the letter dated 16.01.2008 Ex.PW5/1 which forms the basis of the approval of the Note dated 02.02.2008 by the Board of defendant No.1 did not mention the value of the securities on the date when the plaintiff was relieved from LBlock Branch.
25. As already mentioned before, PW6 deposed that the record pertaining to the loan accounts of M/s UKG Engg., M/s Sona Machines & Engg, M/s Sona Insulation, and M/s Raja Sons were not available since they were more than 15 years old and had been destroyed. He was also not cross examined.
26. DW1 deposed that he was not aware of the securities taken from the loan defaulters by the plaintiff. He was not aware of the securities of the loan defaulters lying with the bank when the plaintiff was relieved from the Branch of LBlock, New Delhi. He further deposed that he was not aware whether the securities standing in the account of the loanees were sufficient to recover the outstanding balance. However, a perusal of Ex.PW3/1, which are documents of settlment/compromise of the Bank with the defaulting borrowers, reveals the following:
1) So far as the M/s UKG Engg. Pvt. Ltd.I is concerned there was a collateral security of immovable property at Suit No. 112/16 Page 23 of 37 M. L. Mahajan vs. Punjab National Bank & Another Shahdara of the value of Rs.14.50 Lakhs. This collateral was submitted by the Director of M/s UKG Engg Pvt. Ltd.
i.e. Sh. Umesh Kumar Gupta. However, a perusal of Ex.PW3/1 shows that Sh. Umesh Kumar Gupta was only a power of attorney holder qua the said property and had no other title document. As a result of this fact, there is specific observation in the proposal of compromise form that it will be difficult to realize the dues of the bank from the collateral securities. That apart, primary security was nil as per Ex.PW3/1.
(2) M/s UKG Engg. Pvt. Ltd.II - Primary security was nil. Mortgaged property/collateral property measuring 1092 sq. meters in Sector57, Noida was of the value of Rs.55 Lakhs.
(3) M/s Sona Machines & Engg. Pvt. Ltd. Primary security was nil. Collateral property i.e. a piece of agricultural land at village Rangpuri, Mehrauli had been acquired by the DDA for Rs.3.65 Lakhs for which even the compensation had not been claimed by the bank. (4) M/s Sona Super Insulation - Primary securities were nil. Collateral security of 805 sq. yds immovable property at Mansarovar Park, Delhi of the value of Rs.10 Lakhs was available with the Bank.
27. However, the settlement/compromise documents are Suit No. 112/16 Page 24 of 37 M. L. Mahajan vs. Punjab National Bank & Another of the year 2001 and not of 1989. As such, the compromise documents can not reflect the status of securities as they existed in 1989 when the plaintiff was transferred from L Block, New Delhi. Plaintiff himself could not lead any evidence to prove that the loans granted by him during the tenure in question were well covered by adequate number of securities. His assertion in the plaint and affidavit could not be substantiated by documentary evidence. The other PWs examined by him, though all of them were serving employees of the defendant No.1 (except PW8), could not depose regarding the securities available with the Bank (defendant No.1) at the time of transfer of plaintiff from Branch LBlock, Connaught Place, New Delhi. Still further, there was no record to show the actual amount outstanding in the loan account of UKG Group of Companies at the time of transfer of the plaintiff from L Block, Connaught Place, New Delhi. Thus, in the absence of any documents showing the outstanding amount in loan accounts or the list of primary and collateral securities in 1989, no finding can be returned on this issue as the evidence led is wholly deficient.
ISSUE NO.4 Whether the defendant suffered losses of Suit No. 112/16 Page 25 of 37 M. L. Mahajan vs. Punjab National Bank & Another Rs.72,83,502.60p because of lapses on the part of plaintiff?
28. This issue forms the core of dispute in the present suit since the claim of the plaintiff is that the defendant No.1 was not entitled to forfeit the contribution of the Bank i.e. PNB in the CPF account of the plaintiff as the bank did not suffer any loss due to his misconduct or ommission. The plaintiff throughout the suit had contended that the right of the bank to follow this discretion could be exercised only in case any loss was quantified on account of plaintiff's official conduct.
29. In order to assess this issue, the court has to look into two documents i.e. Ex.PW3/1 and Ex.DW1/3. As has already been mentioned before, Ex.PW3/1 was exhibited by PW3 who was an official of the defendant bank and had brought the documents regarding proposal for settlement/compromise of the accounts of M/s UKG Engg. Group companies. Ex.DW1/3 was filed subsequently by the defendant No.1 for which it sought permission from the Trial Court and which was granted. Careful perusal of Ex.PW3/1 reveals the following facts regarding the loan account of M/s UKG Group:
(1) M/S UKG Engg Pvt Ltd.I was lying closed since Suit No. 112/16 Page 26 of 37 M. L. Mahajan vs. Punjab National Bank & Another 1990. As on 31.12.2001, the outstanding balance in the loan account was Rs.15,23,818.60/. To recover this amount suit was filed on 17.09.1991. Pendentelite interest on the outstanding balance on 31.12.2001 was Rs.
39,02,681/. Therefore, the total outstanding amount in the loan account of M/s UKG Engg. Pvt Ltd was Rs.54,54,466/. The compromise offer was of Rs.10,91,000/ and the percentage of the compromise amount to the total outstanding amount was 19.98%. Brief history of the account along with proposal for settlement form shows that there was gross default on the part of the plaintiff regarding the securities. It was noted that primary security was nil since unit has been lying closed since 1990 and collateral security was difficult to enforce since title documents of the immovable property were not complete.
Importantly, the Form of proposal for settlement when tallied with the Ex.DW1/3 shows that Rs.15,23,818/ was due to the bank on 17.09.1991. Out of this amount Rs.12,25,000/ was paid by way of compromise on 12.03.2004. The balance remaining amount of Rs.2,98,818.60/, the outstanding pendentelite interest of Rs.39,02,681/ and legal charges of Rs.27,967/ added upto a total loss of Rs.42,29,466/.
(2) M/s Sona Machines & Engg. India Pvt. Ltd. If the Form Suit No. 112/16 Page 27 of 37 M. L. Mahajan vs. Punjab National Bank & Another of proposal for settlement is perused, the outstanding amount as on 31.12.2001 was Rs.12,06,144/. Pendentelite interest was Rs.38,07,341/. The compromise offer was of Rs.8,63,000/ and percentage of compromise offer to the total amount due was 22.66%. The proposal for settlement form also mentions that the responsibility for this loan being termed as bad or non performing was due to illegal acts of M. L. Mahajan i.e. plaintiff. If the proposal form of M/s Sona Machines and Engg. is tallied with Ex.DW1/3, it again shows the same figure as the outstanding amount. However, the amount paid by way of compromise in this loan account on 12.03.2004 was Rs.9,69,000/ leaving a balance outstanding of Rs.2,37,144/. The interest as per decree was Rs.25,75,287/ and legal charges were Rs.25,910/. Accordingly, the total loss suffered by the defendant No.1 in this account was Rs.28,34,341/.
30. It needs to be highlighted that in so far as Ex.DW1/3 and Ex.PW5/1 are concerned, the loss caused to defendant No.1 due to the loan account of M/s Sona Super Insulation has been shown as Rs.2,15,695/. However, as per the document of bank itself i.e. Ex.PW3/1 proved by PW3 Sh. R. B. Meena, Sr. Manager, PNB, plaintiff had no role in the loan account of M/s Sona Super Insulation. So far as the sanctioning the loan/financial credit to M/s Sona Super Suit No. 112/16 Page 28 of 37 M. L. Mahajan vs. Punjab National Bank & Another Insulation is concerned, the default was of Sh. C. L. Khanna. However, even if the loss caused in the account M/s Sona Super Insulation is deleted, still a loss of Rs.70,67,807.60/ has been caused to the bank as a result of compromise entered into by the bank with the M/s UKG Group of companies/ loan defaulters. Ex.PW3/1 puts the liability for loss to defendant No.1 on the plaintiff in so far as loan accounts of UKG Engineering Pvt Ltd. And Sona Machines & Engineering India (P) Ltd. are concerned. Hence, this issue is decided in favour of the defendant.
ISSUE NO.5
5.(a)Whether the Bank/defendant's contribution of Provident Fund of plaintiff was in trust with defendant no.2?
31. Although in the plaint, it was specifically averred by the plaintiff that the bank's contribution to the CPF account of the plaintiff was held in Trust by defendant No.2 but at the time of leading his evidence by way of affidavit, the plaintiff, was completely silent on this aspect. Even during cross examination of DW1 no such suggestion was given by the Learned counsel for the plaintiff to the defendant witness that the bank's contribution in CPF account was Suit No. 112/16 Page 29 of 37 M. L. Mahajan vs. Punjab National Bank & Another held in Trust by the defendant No.2 for the plaintiff. No suggestions or questions were put to PW2 also on this issue who, at the relevant time, was in the Pension and PF Department, PNB. Still further, Rule 13 of the PNB Employees Provident Fund Rules, itself mentions that Bank will have a lien on its contribution to the employee's account. A lien is possible only on something which one can rightfully claim as a vested right. The Fund was maintained by defendant No.2 and defendant No.1 contributed to the same. The plaintiff, or any employee for that matter, did not have an unrestricted right to withdraw money from the CPF account. Withdrawal was subject to a number of restrictions and the employee was restricted from withdrawing 100% of even his own contribution. Thus, it is clear that so long as the amount outstanding in the account of employee is not paid to him, atleast the Bank's contribution can not be utilized by the employee. Thus, there cannot be any entrustment to the Bank of its contribution over which it retained a lien. If at all, it is employee's contribution which can be said to be in trust with the defendants but in the present case, same had already been paid to the plaintiff.
32. In view of above, this issue is decided against the plaintiff and in favour of the defendants.
Suit No. 112/16 Page 30 of 37M. L. Mahajan vs. Punjab National Bank & Another
5. (b)Whether the plaintiff's Bank's Contributory Provident Fund has been forfeited by the defendant with Board Resolution dated 02.02.2008 and in terms of Rule 13 of PNB Employees Provident Fund Trust Rules?
33. The issue, whether the bank's contribution to the PF was forfeited by the defendant No.1 in accordance with Rule 13 of the PNB Employees Provident Fund Trust Rules, was to be proved by the defendant. For discharging the onus, the defendants have placed on record Ex.DW1/1 which is the Board Note dated 02.02.2008, which clearly mentions that the bank's contribution in the CPF account of the plaintiff was being forfeited under Rule 13 of the PNB Employees Provident Fund Trust Rules. In addition, DW1 also deposed that the forfeiture of the bank's contribution was done in terms of the PNB Employees Provident Fund Trust Rules, which were exhibited as Ex.DW1/2. In response to the specific averment made by DW1 in his affidavit, no suggestion was put at all by the Learned counsel for the plaintiff that the forfeiture was not done by the defendant No.1 in accordance with Rule 13 of the PNB Employees Provident Fund Trust Rules.
Suit No. 112/16 Page 31 of 37M. L. Mahajan vs. Punjab National Bank & Another
34. In fact the entire pleaded defence of defendants is that they were entitled to forfeit the Bank's contribution under Rule 13 of the PNB Employee's Provident Fund Rules as the Bank has suffered a loss due to the misconduct of the plaintiff. The defendants have relied on DW1/3 to quantify the loss incurred by defendant No.1. Plaintiff has not disputed that the forfeiture was not in accordance with Rule 13. However, plaintiff denies that any loss was caused to the Bank entitling it to invoke Rule 13. In view of above, this issue is decided in favour of the defendant.
ISSUE NO.6 Whether the plaintiff is entitled for decree of declaration against defendants, as prayed in clause 1 of prayer clause?
35. The onus to prove this issue was on the plaintiff.
Although, the defendants had a right to forfeit the bank's contribution in the CPF account of the plaintiff under Rule 13 of the PNB Employees Provident Fund Trust Rules, same could have been done only if the bank had suffered any loss due to any act, omission or gross misconduct by the employee. Rule 13 of the PNB Employees Provident Fund Trust Rules specifically states that the Bank has a lien Suit No. 112/16 Page 32 of 37 M. L. Mahajan vs. Punjab National Bank & Another on the contribution made by it in the CPF account of any member.
36. It is not in dispute that at the time when the plaintiff was dismissed from service, the ground for dismissing him was that the recovery of loans advanced by him during his tenure as Sr. Manager has fallen in jeopardy. In other words, at the time of dismissal of the plaintiff no particular loss had actually been caused to the Bank but there was a grave apprehension that due to the misconduct of the plaintiff, defendant would not be able to recover the loans from the defaulting borrowers. Subsequently, vide Board Note dated 02.02.2008, which was prepared on the basis of Ex.PW5/1 i.e. the letter dated 16.01.2008, the actual loss caused to the bank was quantified. It was this quantification of loss caused to the 'Bank' which led the defendant No.1 to take the decision to forfeit the Bank's contribution in the CPF account of the plaintiff. It is also not in dispute that the plaintiff was never informed regarding the quantification of the loss. It was only when the plaintiff moved an application under the RTI Act seeking to know the status of his representation regarding Bank's contribution in his CPF account, that the defendant No.1 replied that the Bank has forfeited its contribution to the CPF account of the plaintiff. There is a long time gap Suit No. 112/16 Page 33 of 37 M. L. Mahajan vs. Punjab National Bank & Another between the dismissal of the plaintiff and the decision of the defendant No.1 to forfeit the bank's contribution. It is not in doubt that Bank's right to forfeit its contribution i.e. under Rule 13 of the PNB Employee's Provident Fund Trust Rules is subject to a loss actually having been suffered. Rule 13 also does not suggest that forfeiture under Rule 13 is an automatic consequence of dismissal from service of an employee. Thus, the only conclusion that can be arrived at is that defendant No.1 had a fresh cause of action to invoke Rule 13 of the PNB Employee's Provident Fund Trust Rules i.e. on the quantification of loss actually having been caused. As such, before taking any action under Rule 13, it was imperative for the defendant No.1 to atleast issue a Notice to the plaintiff to show cause as to why the Bank's contribution in the CPF account of the plaintiff should not be forfeited. Had a Notice been issued to the plaintiff, he would have had an opportunity to convince the defendant No.1 or plead his case before it to the effect that the loss caused was not due to his misconduct or omission. Given the admitted position that the plaintiff was never informed about the quantification of the loss caused to the defendant by his act, it was necessary for the bank to have issued a notice to him informing him regarding the intention of the bank to forfeit the bank's contribution. A careful perusal of Suit No. 112/16 Page 34 of 37 M. L. Mahajan vs. Punjab National Bank & Another the deposition of PW3, PW5 and DW1 reveals that defendant No.1 itself was unaware of the factual position regarding status and value of primary securities at the time when the plaintiff was transferred from LBlock, Connaught Place, New Delhi or at the time when the loan accounts in question were classified as NPAs'. The loan accounts were eventually compromised in the year 2002. The above facts make out a strong case for opportunity of hearing to be given to the plaintiff before passing an order causing monetary loss to him. In any case, such an order should not be passed at the back of the plaintiff.
37. Accordingly, the bank Note dated 02.02.2008, approved on 19.02.2008 is declared null and void. The defendant No.1 is directed to issue a notice to the plaintiff and provide an opportunity to him to present his case against the finding arrived at by the defendant No.1 that the loss of Rs.70,67,807.60/ has been caused due to the misconduct on the part of the plaintiff. The said opportunity shall be proved within a period of 2 months from the date of passing this judgment. Thereafter, defendant No.1 shall pass a speaking order on whether or not the plaintiff is entitled to Bank's contribution in his CPF account.
Suit No. 112/16 Page 35 of 37M. L. Mahajan vs. Punjab National Bank & Another ISSUE NO.7 Whether the plaintiff is entitled for decree of mandatory injunction against the defendants to make payment of Bank contribution to Provident Fund of the plaintiff for a sum of Rs.6,40,055/ (i.e. Rs.1,99,497/ to contribution Interest of Rs.4,40,558/)?
38. In view of the finding on issue No.6, no finding needs to be given on issue No.7 since defendant No.1 has been directed to pass a speaking order regarding entitlement of plaintiff to claim Bank's contribution in his CPF account.
ISSUE NO.8 Whether the plaintiff is entitled for interest @ 18% per annum, pendentelite and future, against the defendants?
39. In view of the finding on issue No.6, no finding needs to be given on issue No.8 since defendant No.1 has been directed to pass a speaking order regarding entitlement of plaintiff to claim Bank's contribution in his CPF account.
Suit No. 112/16 Page 36 of 37M. L. Mahajan vs. Punjab National Bank & Another RELIEF
40. In view of the findings given above on issue No.6, the suit of the plaintiff is partly decreed by declaring the Bank Note dated 02.02.2008, approved on 19.02.2008 as null and void with directions to the Bank to issue a Notice to the plaintiff and provide an opportunity to him to present his case against the finding arrived at by it that the loss of Rs.70,67,807.60/ has been caused due to the misconduct on the part of the plaintiff. No orders as to cost. Thereafter, file be consigned to the record room after necessary compliance.
ANNOUNCED IN THE OPEN (DR. AJAY GULATI)
COURT ON 10.06.2016 ADDL. DISTRICT JUDGE06
SOUTH, SAKET COURTS,
NEW DELHI
Suit No. 112/16 Page 37 of 37