Orissa High Court
Cuttack Central Co-Operative vs The Joint Labour Commissioner on 8 November, 2024
IN THE HIGH COURT OF ORISSA, CUTTACK
W.P.(C) No.9493 of 2022
Cuttack Central Co-operative
Bank Ltd. ....... Petitioner
-Versus-
The Joint Labour Commissioner,
Bhubaneswar-cum-Appellate
Authority under Payment of
Gratuity Act, Odisha & others ....... Opp. Parties
Advocate for the parties
For Petitioner : Mr. S.J. Mohanty,
Advocate
For Opp. Party Nos.1 to 3 : Mr. T.K. Biswal,
Addl. Govt. Advocate
For Opp. Party Nos.4 : Mr. S. Behera,
Advocate
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CORAM: JUSTICE SANJAY KUMAR MISHRA
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Date of Hearing: 04.09.2024 Date of Judgment: 08.11.2024
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S.K. Mishra, J.
1. This Writ Petition has been preferred by the Petitioner-Bank challenging the confirming Judgment and order dated 28.03.2022 passed by the Appellate Authority under Payment of Gratuity Act-Cum-Joint Labour Commissioner, W.P.(C) No.9493 of 2022 Page 1 of 40 Bhubaneswar, shortly hereinafter, „the Appellate Authority‟, in P.G. Appeal Case No.08 of 2021, so also the order dated 05.11.2019 passed by the Controlling Authority under the Payment of Gratuity Act-Cum-Divisional Labour Commissioner, Cuttack shortly hereinafter, „the Controlling Authority‟, in P.G. Case No.01 of 2019.
2. The brief facts of the case, as detailed in the Writ Petition, is that the Petitioner-Bank i.e. the Cuttack Central Co- operative Bank, is a Society registered under the Odisha Co- operative Societies Act, 1962, shortly hereinafter, „OCS Act, 1962‟. The Opposite Party No.4, who was working as a Deputy Manager in the Petitioner-Bank, superannuated from her service w.e.f. 31.07.2010. After her retirement, she submitted a representation before the Registrar, Co-Operative Societies, Odisha for release of the retiral benefits, which was forwarded by the Joint Registrar, Co-Operative Societies to the Petitioner- Bank vide letter dated 17.04.2012 directing to take prompt action towards payment of her retiral benefits.
3. After receipt of the said letter, the Petitioner Bank, after thorough scrutiny on the liabilities and proceeding lying against the Opposite Party No.4, came to a conclusion that Rs.7,44,084/- is lying against her towards recovery. Out of W.P.(C) No.9493 of 2022 Page 2 of 40 which Rs.3,91,495/- towards loan and guarantee liability, Rs.3,52,589/- towards interest. After adjustment of retiral benefits, Rs.1,68,874/- is pending against the Opposite Party No.4 towards recovery. Thereafter, the Secretary of the Petitioner-Bank issued demand notice requesting the Opposite Party No.4 for payment of the said outstanding amount. Despite receiving notice, the Opposite Party No.4 remained silent over the matter for a long period and also did not deposit the recoverable amount wilfully causing a huge financial loss to the Petitioner-Bank.
4. While the matter stood thus, after nine years of her superannuation, the Opposite Party No.4 approached the Controlling Authority (O.P.2) claiming Rs.4,28,765/- (incorrectly typed as Rs.78,765/-) towards gratuity along with interest. Despite issuance of notice, as the Petitioner-Bank could not appear before the Controlling Authority, due to some unavoidable circumstances, an ex-parte judgment was passed on 05.11.2019 directing the Petitioner-Bank to deposit Rs.8,25,849/- within 30 days from the date of pronouncement of the Judgment, which came to the knowledge of the Petitioner-Bank after the initiation of the certificate proceeding against it before the Sub-Collector, Cuttack, Sadar. However, W.P.(C) No.9493 of 2022 Page 3 of 40 the period of limitation to challenge the said order before the Appellate Authority had elapsed by then. Thus, the Petitioner- Bank challenged the ex-parte judgment so also certificate proceeding before this Court in W.P.(C) No.7285 of 2021. The said Writ Petition stood disposed of vide order dated 03.03.2021 directing the Petitioner-Bank to file an Appeal along with a petition for condonation of delay within 10 days. Accordingly, the Petitioner-Bank preferred an Appeal before the Appellate Authority (O.P.1), which was registered as P.G. Appeal Case No.08 of 2021. The Opposite Party No.1, after hearing, confirmed the order passed by the Controlling Authority vide Judgment and order dated 28.03.2022 directing the Petitioner- Bank to deposit a sum of Rs.8,25,849/- towards gratuity along with interest. Hence, this Writ Petition.
5. Both the orders passed by the Appellate Authority so also Controlling Authority have been challenged in this Writ Petition basically on the following grounds;
i) The Appellate Authority has not applied his
judicious mind to access the documents
pertaining to recovery filed by the Petitioner- Bank.
W.P.(C) No.9493 of 2022 Page 4 of 40
ii) The Appellate Authority should have borne in mind that the Petitioner-Bank was set ex-parte by the Controlling Authority, for which it was neither able to file the documents in respect of damages caused by the Opposite Party No.4 nor got chance to lead rebuttal evidence.
iii) As per sub-section 6(a) of Section 4 of the P.G. Act, the Authority can wholly or partly forfeit the claim of the applicant towards gratuity, if the delinquent employee makes any damage or loss to the organization while in service. As the Opposite Party No.4 was held responsible for financial irregularity, her gratuity was forfeited by a written order passed by the Management. Thus, there is no irregularity or illegality on the part of the Petitioner-Bank to withhold the gratuity of the Opposite Party No.4.
iv) Due to irregularities and illegalities committed by the Opposite Party No.4, the Petitioner-Bank sustained huge loss. Hence, with due intimation her gratuity was withheld. After adjustment of retiral benefits, there is still W.P.(C) No.9493 of 2022 Page 5 of 40 outstanding against the Opposite Party No.4. Hence, demand notice was issued for recovery of such amount.
v) As the Opposite Party No.4 caused pecuniary loss to the Petitioner-Bank, provisions under Section 7(3) and 7(3A) of the Payment of Gratuity Act, 1972, shortly, „the Act, 1972‟ are not applicable to it.
6. The Opposite Party No.4 has filed a Counter Affidavit disputing the facts so also opposing to the prayer of the Petitioner-Bank stating therein that she was working under the Petitioner-Bank and superannuated from her service w.e.f. 31.07.2010. The total qualifying period of service was 33 years and her last drawn salary was Rs.22,521/-. After her retirement from service, though she requested the Petitioner-Bank for payment of gratuity of Rs.4,28,765/-, the same was not paid to her. Because of non-payment of gratuity so also interest for the delayed payment, she approached the Controlling Authority vide P.G. Case No.01 of 2019. The Controlling Authority, after analyzing several pronouncements of the Supreme Court and taking into consideration the facts on record, allowed the claim of the Opposite Party No.4 vide order dated 05.11.2019 W.P.(C) No.9493 of 2022 Page 6 of 40 directing the Petitioner-Bankto deposit an amount of Rs.8,25,849/- in her favour, which includes interest, within the period of 30 days, failing which it was ordered to pay simple interest @ 10% per annum over and above the said awarded amount.
Being aggrieved by the said order, the Petitioner- Bank preferred Appeal No.08 of 2021 before the Appellate Authority. The Appellate Authority, vide order dated 28.03.2022 confirmed the order of the Controlling Authority and directed the Petitioner-Bank to pay the gratuity along with admissible interest to the Opposite Party No.4 in terms of the provisions under the Orissa Payment of Gratuity Rules, 1974, shortly hereinafter, "the Rules, 1974".
It has further been stated in the Counter that the Petitioner-Bank deliberately withheld the gratuity of the Opposite Party No.4 without any authority, after allowing her to retire from service on superannuation. It has also been stated that as per Section 7(3A) read with the Central Government Notification dated 01.10.1987, she is entitled to 10% simple interest for the delayed period. Therefore, the order of imposition of interest in terms of section 7(3A) under the Act, 1972 is justified and the Writ Petition is liable to be dismissed. W.P.(C) No.9493 of 2022 Page 7 of 40
7. In response to the Counter filed by the Opposite Party No.4, the Petitioner-Bank has filed a Rejoinder Affidavit reiterating therein that the Opposite Party No.4 while in service, caused a huge financial loss to the Petitioner-Bank being a Guarantor of two loans, which also became NPA and the loan amounts could not be recovered. As per the settled position of law, the Borrower and the Guarantor are equally liable for repayment of loan outstanding dues. A letter was also issued by the Petitioner-Bank to the Opposite Party No.4 for recovery of the same, who thereafter gave an undertaking to keep her guarantee liabilities lien to Bank till clearance of the loan availed by two persons on 09.07.2012. It is also the case of the Petitioner-Bank that, as the Opposite Party No.4 realized that the Petitioner-Bank has sustained financial loss, she had given such undertaking.
Further, though the Opposite Party No.4 retired from service on 31.07.2010, she approached the Controlling Authority for release of gratuity after 9 years of her superannuation without explaining the reason behind the said delay. Since the Controlling Authority passed an ex-parte judgment, the Petitioner-Bank has neither been heard nor been able to rebut the claim of Opposite Party No.4. W.P.(C) No.9493 of 2022 Page 8 of 40
8. For the first time it has been stated in the Rejoinder that as the Opposite Party No.4 suppressed the facts before the Controlling Authority about her giving an undertaking for repayment of loans in which she stood Guarantor and claimed gratuity and she did not approach the Authority with clean hands. Moreover, it is the case of the Petitioner-Bank that in view of the written consent and undertaking given by Opposite Party No.4, she is not eligible to get gratuity and retiral benefits unless and until the loan outstanding dues, for which she stood as Guarantor is cleared. Thus, as per the written consent, the Opposite Party No.4 should have taken steps to clear the outstanding dues first. Therefore, the judgments of Controlling Authority as well as Appellate Authority are liable to be set aside.
9. Learned Counsel for the Petitioner-Bank submitted that, though the Bank Management was duly noticed by the Controlling Authority, it could not participate in the said proceeding due to official dislocation, for which it was set ex- parte. Taking advantage of such non-appearance, the Opposite Party No.4 suppressed the undertaking given by her on 09.07.2012 to keep her guarantee liabilities lien to bank till clearance of the loan availed by two loanees. Realizing the fact W.P.(C) No.9493 of 2022 Page 9 of 40 that the Petitioner-Bank has sustained financial loss, she had given such undertaking. Though the said fact was brought to the notice of the Appellate Authority in P.G. Appeal Case No.08 of 2021, while passing the impugned order of confirmation, it did not take note of the said admitted fact and erroneously passed the impugned order with an observation that the Petitioner-Bank has deliberately withheld the gratuity of the Opposite Party No.4 without any authority of law, after allowing her to retire on superannuation.
10. Learned Counsel for the Petitioner, to substantiate his submission, relied on the judgment of Punjab & Haryana High Court in Punjab and Sind Bank Vrs. Labour Commissioner and others, reported in (2008) 2 LLJ 841 P&H, wherein, in view of the authorisation to appropriate set off of the liabilities from the Provident Fund/Gratuity executed by the employee, it was held that the Petitioner-Bank was entitled to adjust the gratuity amount of Rs.1,61,700/- towards the outstanding housing loan amount.
11. Per contra, Mr. Behera, learned Counsel for the Opposite Party No.4 submitted that the employees of the Petitioner-Bank are governed under the Staff Service Rules, W.P.(C) No.9493 of 2022 Page 10 of 40 2011 of Central Cooperative Banks. Hence, OCS (CC & A) Rules, 1962 so also Orissa Civil Services (Pension) Rules, 1992 are not applicable to the employees of the Petitioner-Bank. Further, as per Rule 50 of the Staff Service Rules, 2011, the Opposite Party No.4 is entitled for gratuity as per the provisions under the Act, 1972, read with the Rules, 1974.
12. Mr. Behera, learned Counsel for Opposite Party No.4 further submitted that in terms of the provisions under Section 4(6) of Payment of Gratuity Act, 1972, the Employer is only entitled to forfeit gratuity of an employee partially or wholly, whose service has been terminated. Since the Opposite Party No.4 was allowed to retire from service on attaining the age of superannuation on 31.07.2010, the Petitioner-Bank has no authority under law to withhold or forfeit the gratuity of his client. Further, there is no such specific provision in the Staff Service Rules, 2011 of the Petitioner-Bank for withholding gratuity on account of pendency of any loan or guarantee liability against an employee after his/her retirement. Thus, as per the settled position of law, in the absence of any specific provision to the said effect, the plea of the Petitioner to forfeit the gratuity of Opposite Party No.4 because of outstanding recoverable amount against her is not tenable. That apart, the W.P.(C) No.9493 of 2022 Page 11 of 40 Petitioner-Bank for the first time has taken a plea in its Rejoinder as to undertaking given by his client on 09.07.2012 to keep the guarantor liability lien to Bank till clearance of the loan amount by the loanee. In the said so called undertaking the Opposite Party No.4 never authorised the Petitioner-Bank to adjust or recover the unpaid loan amount from the after retiral dues including gratuity.
13. Further, drawing attention of this Court to the Judgment of this Court in MD, OSIC Vs. Abhay Kumar Samantray, reported in 2022 (III) ILR-CUT-639, learned Counsel for the Opposite Party No.4 submitted that his client is entitled for 10% simple interest per annum on the gratuity amount from the date of her superannuation till the date of actual payment. The Controlling Authority (O.P.2) calculated interest from 01.08.2010 to 05.11.2019 (date of Judgment) to be 9 years 3 months 4 days in P.G Case No. 01 of 2019 vide Judgment dated 05.11.2019, which has been subsequently confirmed by the Appellate Authority (O.P.1) in P.G Appeal Case No.08 of 2021.
14. Mr. Behera, learned Counsel for the Opposite Party No.4, further submitted that admittedly the Opposite Party No.4 was allowed to retire from service on attaining the age of W.P.(C) No.9493 of 2022 Page 12 of 40 superannuation. There is no such provision either under the H.R. Policy of Central Cooperative Banks incorporating Staff Service Rules, 2011 applicable to the employees of Petitioner- Bank or in the Act, 1972 for withholding Gratuity on account of outstanding recoverable amount after allowing the concerned employee to retire from service on superannuation. Mr. Behera, drawing attention of this Court to the provision of Sub-Section 2 of Section 7 of P.G. Act, 1972, submitted that the Petitioner being the Employer is under an obligation to determine the amount of gratuity and give notice in writing to the person to whom the gratuity is payable and also the Controlling Authority under the P.G Act specifying the amount of gratuity so determined irrespective of an application for gratuity being filed by the employee concerned or not. Though the Opposite Party No.4 was superannuated on 31.07.2010, no communication was made thereafter to forfeit the gratuity of his client on the plea of causing loss to the Employer in terms of Section 4(6) of the Act, 1972.
15. Learned Counsel for the Opposite Party No.4 further submitted that as the Petitioner-Bank failed to appear on the date fixed, despite service of notice, the Controlling Authority passed an ex-parte order after hearing the Opposite Party No.4. W.P.(C) No.9493 of 2022 Page 13 of 40 Since no sufficient reason was assigned by the Petitioner-Bank before the Controlling Authority within 30 days of the ex-parte order, the Petitioner-Bank is estopped to raise the self-same issue.
16. To substantiate his submissions, learned Counsel for the Opposite Party No.4 relied on the judgments of this Court in Senior Branch Manager, NSIC Ltd. & another Vs. The Deputy Chief Labour Commissioner (Central), Bhubaneswar- cum-the Appellant Authority and others, reported in 2024 (I) ILR CUT 1421, Sharat Chandra Lenka Vs. Orissa State Warehousing Corporation & another, passed in W.P.(C) No.24276 of 2014, Aska Cooperative Central Bank Ltd. Vs. Controlling Authority under the Payment of Gratuity Act- Cum-Assistant Labour Commissioner, Berhampur and another, passed in W.P.(C) No.3329 of 2018, MD OSIC Vs. Abhaya Kumar Samantray, reported in 2022 (III) ILR CUT 639 so also judgments of the Supreme Court in Dev Prakash Tiwari Vs. U.P. Cooperative Institutional Service Board, Lucknow & others, reported in (2014) 7 SCC 260, Maniben Maganbhai Bhariya Vs. District Development Officer Dahod & others, passed in Civil Appeal No.3153 of 2022, Calcutta Dock Labour Board and another Vs. Smt. Sandhya Mitra and others, W.P.(C) No.9493 of 2022 Page 14 of 40 reported in (1985) 2 SCC 1, H. Gangahanume Gowda Vs. Karnataka Agro Industries Corp. Ltd., reported in (2003) 3 SCC 40. He also relied on the judgment of Bombay High Court in Rajinder Kumar Nangia Vs. Rashtriya Chemicals & Fertilizers Ltd., passed in W.P. No.38 of 1995 so also judgment of Keral High Court in E-Team Informatica India (P) Ltd. Vs. Mathew M. Gerorge and others, reported in 2019 LLR 296.
17. On perusal of the order dated 05.11.2019, passed by the Controlling Authority, it is found that the Petitioner-Bank (Opposite Party in P.G. Case No.01 of 2019), being noticed, did not appear on 16.02.2019. Hence, it was set ex-parte on the very same day. All the four issues framed in the said case were answered in favour of the Opposite Party No.4. However, while answering Issue No.4, as to what should be the quantum of gratuity payable to the Opposite Party No.4, it was held that she is entitled for gratuity of Rs.4,28,765/- so also interest @ 10% on the said amount from the date it became due till the date of payment. While ordering so, the Controlling Authority relied on several judgments of the Supreme Court so also judgment of Allahabad High Court as well as this Court.
18. From the pleadings and documents on record so also arguments advanced by the learned Counsel for the parties, it is W.P.(C) No.9493 of 2022 Page 15 of 40 amply clear that despite issuance of notice to the Petitioner- Bank, it chose not to appear before the Controlling Authority, as a result of which, an ex-parte Judgment was passed on 05.11.2019 directing the Petitioner-Bank to deposit an amount of Rs.8,25,849/- within a period of 30 days from the date of pronouncement of the Judgment. Thereafter, the Petitioner- Bank, as provided under Section 7(7) of the Act, 1972, instead of preferring an Appeal, directly approached this Court in W.P.(C) No.7285 of 2021, which was disposed of on 03.03.2021 giving liberty to the Petitioner-Bank to prefer an Appeal.
19. Liberty being granted, the Petitioner-Bank preferred P.G. Appeal Case No.8 of 2021 basically on the grounds that on thorough scrutiny on the liabilities against the Opposite Party No.4, it came to a conclusion that Rs.7,44,084/- is lying against her towards recovery. Out of which Rs.3,91,445/- is lying as loan and guarantee liability. After adjustment of the recoverable amount from the retiral benefits, Rs.1,68,874/- is pending against the Opposite Party No.4 towards recovery. The Petitioner-Bank also made request to the Respondent No.4 vide letter dated 18.05.2012 to deposit the said amount of Rs.1,68,874/- within a period of fifteen days from the date of issue of said notice. Thereafter, the Opposite Party No.4 W.P.(C) No.9493 of 2022 Page 16 of 40 remained silent over a long period and also not deposited the said recoverable amount willfully.
Though notice given by the Controlling Authority was duly served on the Petitioner-Bank directing it to appear on 16.02.2019, due to official dislocation in the legal section, adequate steps could not be taken by the Petitioner-Bank towards filing of Objection before the Controlling Authority. As a result, the said Application was decided ex-parte vide order dated 05.11.2019 directing the Petitioner Bank to deposit Rs.8,25,849/- within 30 days from the date of pronouncement of the said judgment.
A further ground was urged in the Appeal that there was sufficient cause to held up the gratuity so also retiral benefits of the Opposite Party No.4 because of the aforesaid reasons and the said facts could not be brought to the notice of the Controlling Authority. That apart, a ground was also taken before the Appellate Authority that in view of the provisions under Clause-6(a) of Section 4 of the Act, 1972, the Petitioner/Appellant-Bank stopped payment of gratuity to the Opposite Party No.4 (Respondent No.3 before the Court below) after her retirement because of damage or loss caused to the organization during her service tenure.
W.P.(C) No.9493 of 2022 Page 17 of 40
Relying on the judgment in Punjab & Sind Bank (supra), it was stated that the gratuity amount as well as retirement benefits of Opposite Party No.4 were rightly held up till recovery of outstanding dues against her towards loan and guarantee liability.
20. As it reveals from the impugned order dated 28.03.2022 passed by the Appellate Authority, taking into consideration the said grounds urged in the Memorandum of Appeal, it was held as follows:-
"5. xxxx xxxx xxxx On perusal of the judgment passed by the learned Controlling Authority, it appears that the issues were framed and the said issues have been answered by the learned Controlling Authority in affirmative in favour of the respondent No.1. So far the relevant service rules of the bank it is crystal clear that the employees of Cuttack Central Cooperative Bank Ltd., are entitled to gratuity as per the provision of Payment of Gratuity Act, 1972 read with Orissa Payment of Gratuity Rules, 1974.
The rules of the Bank clearly speaks as follows:-
"Every employee of the Bank shall be entitled to payment of gratuity as per the provisions of the Payment of Gratuity Act, 1972 read with the Orissa Payment of Gratuity Rule, 1974."
In so far as Sec. 4(6)(b) of the Payment of Gratuity Act, 1972 is concerned, the same read as follows;
(b) The gratuity payable to an employee (may be wholly or partially forfeited)-
(i) If the services of such employee have been terminated for his riotous or disorderly conduct or any other act of violence on his part or W.P.(C) No.9493 of 2022 Page 18 of 40
(ii) If the services of such employee have been terminated for any act which constitutes an offence involving moral turpitude, provided that such offence is committed by him in the course of his employment.
6. On perusal of the "Staff Service Rule, 1980" as well as Sec.4(6)(b) of the Payment of Gratuity Act, 1972, it is made clear that if the services of an employee have been terminated for any act which constitute an offence involving moral turpitude that the Authority is empowered to withheld the gratuity wholly or partly. But in the present case, the respondent No.1 has not been terminated rather he was allowed to retire by the appellant bank on attaining the age of superannuation w.e.f. 31.07.2010 without even initiating any disciplinary proceeding. Neither in the Staff Service Rule nor in the Payment of Gratuity Act, there is any provision for withholding of gratuity merely on pendency of a criminal case or departmental proceeding against the employee who has been allowed to retire on superannuation by the employer.
Since, in the present case at hand, the respondent No.1 has been allowed to retire on superannuation w.e.f. 31.07.2010 as per the order passed by the appellant bank and all his retirement dues along with gratuity has not been paid to her. But withholding her gratuity after her superannuation is not tenable since the gratuity amount of the respondent No.1 is protected under Article 300(A) of the Constitution of India as the Hon'ble Apex Court has termed the gratuity amount of an employee as property.
xxxx xxxx xxxx
8. Mr. P.K. Rout further argued that in the recent decisions of the Hon‟ble Apex Court in the case of "Chairman-cum-Managing Director, Mahanadi Coal Field Ltd. Vrs. Rabindranath Choubey : AIR 2020 SC 2978", the respondent No.1 is not entitled for gratuity.
On perusal of the said judgment of the Hon‟ble Apex Court, it is crystal clear that the fact of the said case is not identical to the present one. In that case, a departmental proceeding is pending against the employee of the MCL as per CDA Rules, 1978 and as per the relevant Service Rules i.e., Rules, 34.3 of the CDA Rules, 1978 in which there was a provision for "withholding of gratuity during W.P.(C) No.9493 of 2022 Page 19 of 40 pendency of disciplinary proceeding". But in the present case no such provision is there under the Staff Service Rules for withholding of gratuity amount of a retire employee on account of pendency of criminal case. As such, the fact of that case is totally a different one from the present case at hand.
xxxx xxxx xxxx On perusal of record as well as impugned order it is found that since the appellant bank has deliberately withheld the gratuity of the respondent No.1 without any authority of law after allowing the respondent No.1 to retire on superannuation, the order of imposition of interest as per Sec. 7(3A) of the Payment of Gratuity Act is justified in the present situation.
10. Considering the argument advanced by the respective parties as well as on perusal of the documents filed and going through the written arguments replies filed by the respective parties, it is crystal clear that the respondent No.1 has been allowed to retire on superannuation w.e.f. 31.07.2010 by the appellant bank and since there is no such provision under the Staff Service Rules, read with Payment of Gratuity Act, 1972 for withholding of gratuity on account of pendency of a disciplinary/departmental proceeding after superannuation of the employee of the Cuttack Central Cooperative Bank Ltd., this court came to a conclusion that the learned Controlling Authority has not committed any error while passing the order dt. 05.11.2019. In P.G. case No.07 of 2018 and directing the appellant bank to pay the gratuity along with admissible interest to the respondent No.1 as per provisions of the Orissa Payment of Gratuity Rules, 1974. Hence, the present appeal is dismissed being devoid of merit."
(Emphasis supplied)
21. Admittedly, the Opposite Party No.4 was superannuated from service w.e.f. 31.07.2010. Since the W.P.(C) No.9493 of 2022 Page 20 of 40 Petitioner-Bank did not pay the amount of gratuity along with interest, the Opposite Party No.4 approached the Controlling Authority vide P.G. Case No.01 of 2019. Despite notice, the Petitioner-Bank did not appear before the Controlling Authority. However, because of the facts detailed above, liberty being granted by this Court, it approached the Appellate Authority in P.G. Appeal Case No.8 of 2021, taking a plea of further recovery of outstanding amount of Rs.1,68,874/- after adjustment of the recoverable amount from the retiral benefits of the Opposite Party No.4, including gratuity.
22. As held by the Supreme Court in Rabindranath Choubey (supra), relied upon by the learned Counsel for the Petitioner-Bank, the employer has a right to held up the gratuity amount as well as retirement benefits till finalization of the proceedings lying against the Opposite Party No.4. However, in the present case, no proceeding was even initiated against the Opposite Party No.4 till her retirement for alleged loss caused to the Petitioner-Bank nor service of the Opposite Party No.4 was terminated on that ground.
It was further held by the Supreme Court in the said case that in view of the specific service rules of the employer in the said case to withhold gratuity during pendency of W.P.(C) No.9493 of 2022 Page 21 of 40 departmental as well as criminal proceeding against an employee, it was justified to do so. So far as the Petitioner-Bank is concerned, admittedly, there is no such service rule with regard to withholding or forfeiting the gratuity. Rather, the service rules of the Petitioner Bank provides as to applicability of the Act, 1972 so far as payment of gratuity to its employees.
Sub-section (3A) of Section 7 of the Act, 1972 permits the employer to withhold the gratuity of a retired employee, subject to seeking permission from the Controlling Authority to do so, failing which the employer is liable to pay interest.
23. As provided under sub-section (6) (b) of Section 4 of the Act, 1972, gratuity payable to an employee can be wholly or partially forfeited, if the services of such employee have been terminated for his riotous or disorderly conduct or any other act of violence on his part; or, if the services of such employee have been terminated for any act, which constitutes an offence involving moral turpitude, provided that such offence is committed by him in course of his employment. But in the present case, the Opposite Party No.4 has not been terminated. Rather she was allowed to retire by the Petitioner-Bank on attaining the age of superannuation w.e.f. 31.07.2010 without W.P.(C) No.9493 of 2022 Page 22 of 40 initiating any proceeding for recovery of the loan amount, for which she stood as guarantor.
24. Admittedly, though this Court granted liberty to the Petitioner-Bank to prefer an Appeal before the Appellate Authority under Section 7(7) of the Act, 1972, the Petitioner- Bank failed to demonstrate before the Appellate Authority that the service rules of the employer entitles it to withhold the gratuity of an employee after her retirement. That apart, it also failed to demonstrate before the Appellate Authority regarding any communication made to the Opposite Party No.4 indicating therein as to its intention to withhold or forfeit the gratuity earned by her. Rather, it chose to remain silent on the plea of outstanding dues lying against the Opposite Party No.4 towards unpaid loan and guarantee liability.
25. This Court in a recent judgment in The Sr. Branch Manager, the National Small Industries Corporation Ltd. (supra), taking note of various provisions under the Act, 1972 so also Rules, 1972 and various judgments of the Supreme Court held as follows:
"42. On examination of the various legal provisions under the Act, 1972 and Rules made thereunder so also the Judgments cited by the learned Counsel for the W.P.(C) No.9493 of 2022 Page 23 of 40 parties, as detailed above, this Court is of the following views:
a) As prescribed under section 4(1) of the Act, 1972, gratuity shall be payable to an employee on the termination of his employment after he has rendered continuous service for not less than five years on his superannuation or on his retirement or resignation or on his death or disablement due to accident or disease. However, completion of continuous service of five years shall not be necessary where the termination of the employment of any employee is due to death or disablement.
b) In terms of section 7(1) of the Act, 1972 read with rule 7(1) & (6) of the Rules, 1972, a person, who is eligible for payment of gratuity under the said Act, 1972 or any person authorized, in writing, to act on his behalf, shall send a written application to the Employer in Form „I‟ ordinarily within thirty days from the date the gratuity became payable, either by personal service or by registered post acknowledgement due.
c) As provided under rule 7 (1) of the Rules, 1972, where the date of superannuation or retirement of an employee is known, the employee may apply to the Employer before thirty days of the date of superannuation or retirement for payment of gratuity.
d) Rule 7(5) of the Rules, 1972 provides that an application for payment of gratuity filed after the expiry of the periods specified in rule 7(1) of the Rules, 1972 shall also be entertained by the Employer, if the applicant adduces sufficient cause for the delay in preferring his claim.
e) As provided under rule 7(5) of the Rules, 1972, no claim for the gratuity under the Act, 1972 shall be invalid merely because the claimant has failed to present his application within the specified period.W.P.(C) No.9493 of 2022 Page 24 of 40
f) In terms of Rule-8(1) under Rules, 1972, within fifteen days of the receipt of an application under rule 7 for payment of gratuity, the Employer shall, if the claim is found admissible on verification, issue a notice in Form „L‟ to the applicant employee, nominee or legal heir, as the case may be, specifying the amount of gratuity payable and fixing a date, not being later than the thirtieth day after the date of receipt of the application, for payment thereof.
g) As provided under rule 8(1) (ii) of the Rules, 1972, if the claim for gratuity is not found admissible, the Employer is to issue a notice in Form „M‟ to the applicant employee, nominee or legal heir, as the case may be, specifying the reasons as to why the claim for gratuity is not considered admissible. In either case, where the gratuity claimed is admissible or inadmissible, a copy of the notice in Form „L‟ or „M‟ given to the applicant shall be endorsed to the Controlling Authority.
h) An Employer cannot simply issue notice in Form-M to the employee rejecting claim for payment of gratuity. If the Employer so desires to forfeit the gratuity, a Show Cause Notice has to be given, because the gratuity amount to which the Employee is otherwise entitled is to be forfeited, which is a drastic consequence for the Employee concerned.
i) As provided under rule 10(1)(iii) of the Rules, 1972, if pursuant to the application filed in terms of rule 7 of Rules, 1972 a notice is given under rule 8(1) either specifying an amount of gratuity which is considered by the application less than what is payable or rejecting his/her eligibility for payment of gratuity or the Employer fails to issue any notice as required under rule 8 within the time specified therein, the claimant employee, nominee or legal heir, as the case may be, may, within ninety days of the occurrence of the cause for the application, apply in Form „N‟ to the Controlling Authority for W.P.(C) No.9493 of 2022 Page 25 of 40 issuing a direction under section 7(4) of the Act, 1972 with as many extra copies as are the opposite parties.
j) In view of the provisions enshrined under section 7(2) of the Act, 1972, as soon as gratuity becomes payable, the Employer shall, whether an application referred to in sub-
section (1) has been made or not, determine the amount of gratuity and give notice in writing to the person to whom the gratuity is payable and also the Controlling Authority, specifying the amount of gratuity so determined.
k) As prescribed under section 7(3) of the Act, 1972, the Employer shall arrange to pay the amount of gratuity, within thirty days from the date it becomes payable to the person to whom the gratuity is payable.
l) In terms of section 7(3-A) of the Act, 1972, if the amount of gratuity payable under sub-section (3) is not paid by the Employer within the period specified in sub-section (3), the Employer shall pay, from the date on which the gratuity becomes payable to the date on which it is paid, simple interest at such rate, not exceeding the rate notified by the Central Government from time to time for repayment of long-term deposits, as that Government may, by notification specify (As per the notification dated 10.10.1987 issued by the Central Government, in exercise of powers conferred under sub-section (3-A) of section 7 of the P.G. Act, 1972, 10% interest is payable).
m) In view of the proviso under section 7(3-A) of the Act, 1972, no such interest is payable if the delay in the payment is due to the fault of the employee and the Employer has obtained permission in writing from the Controlling Authority for the delayed payment on the said ground. W.P.(C) No.9493 of 2022 Page 26 of 40
n) As prescribed under section 7(4)(a) of the Act, 1972, if there is any dispute as to the amount of gratuity payable to an employee under the said Act or as to the admissibility of any claim of, or in relation to, an employee for payment of gratuity, or as to the person entitled to receive the gratuity, the Employer shall deposit with the Controlling Authority such amount as he admits to be payable by him as gratuity.
o) Where there is a dispute with regard to any matter or matters specified in clause (a), the Employer or employee or any other person raising the dispute may make an application to the Controlling Authority for deciding the dispute, in terms of section 7(4)(b) of the Act, 1972.
p) As provided under section 7(4)(c) of the Act, 1972, the Controlling Authority shall, after due inquiry and after giving the parties to the dispute a reasonable opportunity of being heard, determine the matter or matters in dispute and if, as a result of such inquiry any amount is found to be payable to the employee, the Controlling Authority shall direct the Employer to pay such amount or, as the case may be, such amount as reduced by the amount already deposited by the Employer.
q) As provided in sub-section (6) of section 4 of the Act, 1972, the gratuity of an employee, whose services have been terminated for any act, wilful omission or negligence causing any damage or loss to, or destruction of, property belonging to the Employer, shall be forfeited to the extent of the damage or loss so caused.
r) As per the settled position of law, as detailed above, before forfeiting the gratuity of an employee in terms of clause (1) of sub-
section 6 of section 4 of the Act, 1972, any damage or loss to, or destruction of, property belonging to the Employer has to be quantified by the Employer.
W.P.(C) No.9493 of 2022 Page 27 of 40
s) Similarly, as prescribed in clause (b) of sub- section 6 of section 4 of the Act, 1972, the gratuity payable to an employee may be wholly or partially forfeited, if the services of such employee have been terminated for his riotous or disorderly conduct or any other act of violence on his part, or if the services of such employee have been terminated for any act which constitutes an offence involving moral turpitude, provided that such offence is committed by him in course of his employment.
t) As held by the apex Court in Union Bank of India (supra), under sub-section (6)(b)(ii) of section 4 of the Act, forfeiture of gratuity is permissible if the termination of an employee is for any misconduct which constitutes an offence involving moral turpitude, and the employee concerned is convicted accordingly by a Court of competent jurisdiction. It is not for the Employer to decide whether the offence has been committed amounting to involving moral turpitude.
u) As held in Rabindranath Choubey (supra), if departmental proceeding has been initiated against an employee before his retirement, if the service rules of the Employer provide so, the departmental proceeding can continue even after retirement of an employee and if the employee is found guilty, minor or major punishment, including the punishment of dismissal can be imposed by the Employer, even the employee has retired.
v) As was further held by the apex Court in Rabindranath Choubey (supra), the enquiry proceeding has to be concluded first on merit and after passing appropriate order in accordance with law, thereafter necessary consequences as per section 4 of the Act, 1972, more particularly sub- section (6) of section-4 of the Act, 1972 and the Rules of the Employer shall to follow. The recovery, as provided under section-4(6) of the Act, 1972, is in addition to a punishment that can be imposed on an employee after his superannuation."
(Emphasis Supplied) W.P.(C) No.9493 of 2022 Page 28 of 40
26. A coordinate Bench of this Court in Sharat Chandra Lenka (supra) held as follows:
"27. Since the petitioner has not been terminated from service but has been superannuated, Section 4(6)(a)(b) of the Act is not applicable against him for the recovery of the loss from his gratuity. On the whole, withholding of his entitlement to the gratuity, CPF and unutilized leave salary as detailed in Annexure-1 being de hors to the provisions of law is liable to be quashed. At the same time, the order of recovery of Rs.11,71,840/- being also contrary to the provisions of the Act and the Regulation of the Corporation as discussed hereinabove are also liable to be quashed. On the whole, the Office Order vide Annexure-1 being illegal, invalid is hereby quashed and opposite party Nos.1 and 2 are directed to pay all the retiral benefits to the petitioner within a period of two months failing which the opposite party Nos.1 and 2 shall pay such amount with 6% simple interest per annum from the date of superannuation till the date of payment.
In the result, the writ petition is allowed".
(Emphasis supplied)
27. The High Court of Bombay in Rajinder Kumar Nangia (supra) held as follows:
"4. It would be seen that Sub-section (1) of Section 4 of the Payment of Gratuity Act, 1972 provides that gratuity shall be payable to an employee on termination of his employment after he has rendered continuous service for not less than five years. The termination of the employment may be on superannuation or on retirement or resignation or death or disablement due to accident or disease of the employee. Thus, an employee becomes entitled to payment of gratuity under the statute. Sub- section (6) is an exception to Sub-section (1) and makes a provision of forfeiture of the gratuity wholly or partially in the circumstances mentioned therein. According to Sub-section (6), gratuity of an employee may be forfeited to the extent of damage or loss caused to the employer if service of that W.P.(C) No.9493 of 2022 Page 29 of 40 employee has been terminated for any act, wilful omission or negligence on that ground. The gratuity payable to an employee may also be forfeited wholly or partially if the service of such employee has been terminated for his riotous or disorderly conduct or any other act of violence on his part or service of such employee has been terminated for any act constituting an offence involving moral turpitude. Though a criminal case was registered against the petitioner by CBI in the year 1993, the fact is petitioner's services have been terminated simpliciter on his superannuation and not for any of the grounds mentioned under Sub-section (6) of Section 4 of the Payment of Gratuity Act, 1972. As a matter of fact, admittedly till petitioner's superannuation and even till date no departmental proceedings of misconduct have been initiated against the petitioner. In this backdrop of facts, it was not open to the respondents to refuse to release the gratuity amount to the petitioner.
5. The learned Counsel for respondents heavily relied on the judgment of the Apex Court in Jarnail Singh v. Secretary, Ministry of Home Affairs and Ors. 1993 LLJ 962 in support of his contention that gratuity can be withheld by the employer respondents if any judicial proceedings are pending against the petitioner relating to his misconduct or negligence during the period of his service. We are afraid the judgment of the Apex Court in Jarnail Singh (supra) has no application in the facts and circumstances of the case before us. The Apex Court in the case of Jarnail Singh (supra) was concerned with the provisions of Central Civil Services (Pension) Rules, 1972 and in the light of the specific Rules 3, 9, 69(1)(c), 71 and 73 held that there was nothing wrong in the order of the President in withholding the gratuity of the employee. In the present case, none of the Rules under consideration before the Apex Court or the similar Rules are applicable but the petitioner is governed by the provisions of the Payment of Gratuity Act, 1972 and as per Section 4(1) petitioner has a statutory right to receive gratuity from his employer save and except in the circumstances provided under Sub-section (6) of Section 4. We have already indicated that none of the circumstances provided in Sub- section (6) is applicable in the present case and, therefore, we do not find any justifiable cause on the part of the respondents in withholding the gratuity. Mere pendency of a criminal case lodged by CBI shall not disentitle the petitioner from receiving gratuity nor shall entitle the respondents to not to release the gratuity to the petitioner as petitioner's W.P.(C) No.9493 of 2022 Page 30 of 40 services came to an end on his attaining superannuation simpliciter. We may note here that Rule 45 of the RCF Employees (Conduct, Discipline and Appeal) Rules, 1993 does provide for departmental action against retired employees. Clause (iii) of Rule 45 provides that in case of an officer who had already retired on superannuation before instituting any departmental proceedings and who has received all retiral benefits, as far as possible only criminal prosecution can be recommended against him. Even under Clause (ii) of Rule 45, it appears that now no departmental action can be initiated against the present petitioner as it provides that if departmental proceedings had not been instituted while the officer was in service, proceedings under Rule 38 for imposition of major penalties can be initiated only by or sanction of the Board of Directors and in respect of a cause of action which arose or in respect of an offence which took place not earlier than four years before the institution of the-proceedings. The petitioner was superannuated in the year 1994: the criminal case was registered against him in the year 1993 before his superannuation but till date I.e. more than seven years of his superannuation, no departmental action has been Initiated and, therefore, such action has become beyond time provided in clause (ii) of Rule 45 of the RCF Employees (Conduct, Discipline and Appeal) Rules, 1993.
6. For all these reasons, we are satisfied that the decision taken by respondents to not to release payment of gratuity to the petitioner cannot be sustained".
(Emphasis Supplied)
28. So far as imposing 10% interest by the Controlling Authority, the Supreme Court in H. Gangahanume Gowda (supra), held as follows.
"7. It is evident from Section 7(2) that as soon as gratuity becomes payable, the employer, whether any application has been made or not, is obliged to determine the amount of gratuity and give notice in writing to the person to whom the gratuity is payable and also to the controlling authority specifying the amount of gratuity. Under Section 7(3), the employer shall arrange to pay the amount of gratuity within 30 days from the date it becomes payable. Under sub-section (3-A) of Section 7, if W.P.(C) No.9493 of 2022 Page 31 of 40 the amount of gratuity is not paid by the employer within the period specified in sub-section (3), he shall pay, from the date on which the gratuity becomes payable to the date on which it is paid, simple interest at such rate not exceeding the rate notified by the Central Government from time to time for repayment of long- term deposits; provided that no such interest shall be payable if the delay in the payment is due to the fault of the employee and the employer has obtained permission in writing from the controlling authority for the delayed payment on that ground. From the provisions made in Section 7, a clear command can be seen mandating the employer to pay the gratuity within the specified time and to pay interest on the delayed payment of gratuity. No discretion is available to exempt or relieve the employer from payment of gratuity with or without interest as the case may be. However, under the proviso to Section 7(3-A), no interest shall be payable if delay in payment of gratuity is due to the fault of the employee and further condition that the employer has obtained permission in writing from the controlling authority for the delayed payment on that ground. Under Section 8, provision is made for recovery of gratuity payable under the Act, if not paid by the employer within the prescribed time. The Collector shall recover the amount of gratuity with compound interest thereon as arrears of land revenue and pay the same to the person entitled. A penal provision is also made in Section 9 for non- payment of gratuity. Payment of gratuity with or without interest, as the case may be, does not lie in the domain of discretion but it is a statutory compulsion. Specific benefits expressly given in a social beneficial legislation cannot be ordinarily denied. Employees on retirement have valuable rights to get gratuity and any culpable delay in payment of gratuity must be visited with the penalty of payment of interest was the view taken in State of Kerala v. M. Padmanabhan Nair¹. Earlier there was no provision for payment of interest on the delayed payment of gratuity. Sub-section (3-A) was added to Section 7 by an amendment, which came into force with effect from 1-10-1987. In the case of Charan Singh v. Birla Textiles this aspect was noticed in the following words: (SCC pp. 214-15, para 4) "4. There was no provision in the Act for payment of interest when the same was quantified by the controlling authority and before the Collector was approached for its realization. In fact, it is on the acceptance of the position that there was a lacuna in the law that Act 22 of 1987 brought about the incorporation of sub-section (3-A) in W.P.(C) No.9493 of 2022 Page 32 of 40 Section 7. That provision has prospective application".
9. It is clear from what is extracted above from the order of the learned Single Judge that interest on delayed payment of gratuity was denied only on the ground that there was doubt whether the appellant was entitled to gratuity, cash equivalent to leave etc., in view of divergent opinion of the courts during the pendency of enquiry. The learned Single Judge having held that the appellant was entitled to payment of gratuity was not right in denying the interest on the delayed payment of gratuity having due regard to Section 7(3-A) of the Act. It was not the case of the respondent that the delay in the payment of gratuity was due to the fault of the employee and that it had obtained permission in writing from the controlling authority for the delayed payment on that ground. As noticed above, there is a clear mandate in the provisions of Section 7 to the employer for payment of gratuity within time and to pay interest on the delayed payment of gratuity. There is also provision to recover the amount of gratuity with compound interest in case the amount of gratuity payable was not paid by the employer in terms of Section 8 of the Act. Since the employer did not satisfy the mandatory requirements of the proviso to Section 7(3-A), no discretion was left to deny the interest to the appellant on belated payment of gratuity. Unfortunately, the Division Bench of the High Court, having found that the appellant was entitled to interest, declined to interfere with the order of the learned Single Judge as regards the claim of interest on delayed payment of gratuity only on the ground that the discretion exercised by the learned Single Judge could not be said to be arbitrary. In the first place in the light of what is stated above, the learned Single Judge could not refuse the grant of interest exercising discretion as against the mandatory provisions contained in Section 7 of the Act. The Division Bench, in our opinion, committed an error in assuming that the learned Single Judge could exercise the discretion in the matter of awarding interest and that such a discretion exercised was not arbitrary".
(Emphasis supplied)
29. Similarly, this Court in Abhay Kumar Samantray (supra), referring to the notification made by the Central W.P.(C) No.9493 of 2022 Page 33 of 40 Government dated 01.10.1987 in terms of sub-section (3-A) of section 7 of the Act, 1972, held as follows:
"22. Hence, this Court is of the view that the Controlling Authority under P.G. Act-Cum-Divisional Labour Commissioner, Cuttack, was justified to take into consideration the total period of service of the Opposite Party from the date of his initial engagement (14.11.1991) till the date of his superannuation (31.03.2018), so also award 10% simple interest on the awarded amount for the delayed period, so also ordering to pay further simple interest @ 10% per annum till the payment is made, if the Petitioner-Corporation fails to deposit the said ordered amount within 30 days from the date of pronouncement of the judgment".
(Emphasis supplied)
30. In Dev Prakash Tiwari (supra), the Supreme Court held as under:
"8. Once the appellant had retired from service on
31.03.2009, there was no authority vested with the respondents for continuing the disciplinary proceeding even for the purpose of imposing any reduction in the retiral benefits payable to the appellant. In the absence of such an authority it must be held that the enquiry had lapsed and the appellant was entitled to get full retiral benefits."
31. In Calcutta Dock Labour Board (supra) the Supreme Court, referring to Section 13 & 14 of the Act, 1972, held that section 13 of the Act, 1972 gives total immunity to gratuity from attachment. Paragraph Nos.5 & 6 of the said judgment, being relevant, are extracted below:
"5. Reference may now be made to Sections 13 and 14 of the Act which are very relevant.W.P.(C) No.9493 of 2022 Page 34 of 40
13. Protection of gratuity - No gratuity payable under this Act shall be liable to attachment in execution of any decree or order of any civil, revenue or criminal court.
14. Act to override other enactments, etc.- The provisions of this Act or any rule made thereunder shall have effect notwithstanding anything inconsistent therewith contained in any enactment other than this Act or in any instrument or contract having effect by virtue of any enactment other than this Act.
6. We may point out that by Central Act No.25 of 1984 Section 13 has been amended with effect from July 1, 1984, and the amended section reads thus:
No gratuity payable under this Act and no gratuity payable to an employee employed in any establishment, factory, mine, oilfield, plantation, port, railway company or shop exempted under Section 5 shall be liable to attachment in execution of any decree or order of any civil, revenue, or criminal court. In the absence of any notification within the meaning of Section 5 of the Act the amendment is not relevant for consideration. Section 14 has overriding effect and Section 13 gives total immunity to gratuity from attachment. The preamble of the Act clearly indicates the legislative intention that the Act sought to provide a scheme for payment of gratuity to all employees engaged in, inter alia, ports and under this Act gratuity was payable to workers like Md. Safiur Rehman. The gratuity which was payable to him squarely came within the purview of the Act and, therefore, became entitled to immunity under Section 13 thereof".
(Emphasis supplied)
32. It is worthwhile to mention here that the Petitioner- Bank took a stand before the Appellate Authority in P.G. Appeal Case No.8 of 2021 that it could not appear before the Controlling Authority, even though it was duly noticed, due to official dislocation in the Legal Section of the Petitioner-Bank on W.P.(C) No.9493 of 2022 Page 35 of 40 16.02.2019. But in the Memorandum of Appeal, as at Annexure-4, it has not been explained as to what prevented the Petitioner-Bank to take adequate steps thereafter till the ex- parte judgment was passed on 05.11.2019, directing the Petitioner-Bank to deposit Rs.8,25,849/-.
33. Further a new stand has been taken in para-7 of the present Writ Petition that due to some unavoidable situation, though the Petitioner-Bank was duly noticed by the Controlling Authority, it could not appear before the said Authority, for which it was set ex-parte. Even though it is a Certiorari proceeding, new facts have been pleaded for the first time in the Writ Petition so also Rejoinder Affidavit and documents have been appended to the Rejoinder as annexures, though the said facts were never pleaded before the Appellate Authority and no such documents were appended to the Memorandum of Appeal.
34. For the first time the so called undertaking given by the Opposite Party No.4 dated 09.07.2012 has been annexed to the Rejoinder as Annexure-8, the contents of which are extracted below for ready reference.
W.P.(C) No.9493 of 2022 Page 36 of 40
"To The Secretary, Cuttack CCB.
Sir, With due respect and humble submission, I beg to state that the guarantor liability in respect of Nikunja Bihari Pattanaik of Jagatsinghpur Branch and Minati Mohanty of Mahila Branch may be kept as Fixed Deposit under lien to Bank. After clearance of loan availed by them the said amount may refunded to me.
Yours faithfully, Sd/-
Sarojini Dei Deputy Manager Retired 09.07.2012 Witness Nadia Bihari Patanaik 09.07.2012 Sd/-
Sarojini Dei This is the signature of Smt. Sarojini Dei Sd/-
09.07.2012"
(Emphasis supplied)
35. As may be seen from the said letter dated 09.07.2012, the Opposite Party No.4, almost after two years of her retirement, gave in writing to keep the guarantor‟s liability in respect of two loanees as fixed deposit under lien to bank and refund the said amount to her after clearance of loan availed by the loanees. She never gave in writing to the bank management to adjust the loan amount from her after retiral dues, more W.P.(C) No.9493 of 2022 Page 37 of 40 particularly from the gratuity amount. Admittedly, neither before the Appellate Authority nor before this Court, it has been pleaded about the status of recovery of loans availed by the loanees pertaining to Jagatsinghpur Brach and Mahila Branch of the bank.
36. Since the Petitioner Bank has taken a stand of withholding/forfeiting the gratuity payable to the Opposite Party No.4 in terms of Section 4(6) of the Act, 1972, the said provision is quoted below for ready reference.
"4. Payment of gratuity.
1) xxx
2) xxx
3) xxx
4) xxx
5) xxx
(6) Notwithstanding anything contained in sub- section (1), -
(a) the gratuity of an employee, whose services have been terminated for any act, wilful omission or negligence causing any damage or loss to, or destruction of, property belonging to the employer, shall be forfeited to the extent of the damage or loss so caused;
(b) the gratuity payable to an employee may be wholly or partially forfeited] -
(i) if the services of such employee have been terminated for his riotous or disorderly conduct or any other act of violence on his part, or
(ii) if the services of such employee have been terminated for any act which constitutes an offence involving moral turpitude, provided that such offence is committed by him in the course of his employment."
(Emphasis supplied) W.P.(C) No.9493 of 2022 Page 38 of 40 From the said provision, it is amply clear that if the service of an employee is terminated for any act, willful omission or negligence causing any damage or loss to, or destruction of property belonging to the employer, gratuity of the concerned employee can be forfeited to the extent of damage or loss so caused. Admittedly, the Opposite Party No.4‟s services were never terminated for causing any damage or loss to the bank. Rather, she was allowed to retire from service w.e.f. 31.07.2010 on attaining the age of superannuation. Hence, stand of forfeiture of gratuity of the Opposite Party No.4 because of alleged loss caused to the bank by standing as guarantor against the loanees is misconceived and untenable in the eye of law.
37. In view of the discussions made above, legal provisions under the Act, 1972 so also settled position of law, this Court is of the view that the Appellate Authority has passed a well discussed and reasoned order dealing with all the points raised in the Appeal and there is no infirmity or illegality in the impugned judgment dated 28.03.2022 passed by the Appellate Authority under the Act, 1972 so also the order passed by the Controlling Authority in P.G. Case No.01 of 2019. W.P.(C) No.9493 of 2022 Page 39 of 40
38. Accordingly, the Writ Petition stands dismissed, being devoid of any merit. No order as to cost.
39. In view of dismissal of the Writ Petition, the interim order dated 28.07.2022 passed in I.A. No.4970 of 2022, which stood extended from time to time, stands vacated.
40. The Authority concerned is at liberty to release the deposited amount in favour of the Opposite Party No.4.
................................
S.K. MISHRA, J.
Orissa High Court, Cuttack Dated the 8th November, 2024/Prasant Signature Not Verified Digitally Signed Signed by: PRASANT KUMAR PRADHAN Designation: Secretary Reason: Authentication Location: High Court of Orissa, Cuttack.
Date: 11-Nov-2024 17:24:03 W.P.(C) No.9493 of 2022 Page 40 of 40