Mohanan Nair P.G vs Omallur Service Co-Operative Bank ... on 5 May, 2022

[Cites 49, Cited by 4]

Kerala High Court

Mohanan Nair P.G vs Omallur Service Co-Operative Bank ... on 5 May, 2022

The judgment rendered by the learned Single Judge on 21.2.2020 dismissing the instant Writ Petition (Civil) No.24570/2019 is the subject matter of challenge in the instant intra court appeal instituted under Sec. 5(i) of the Kerala High Court Act.

2. The appellant in the W.A. is the petitioner in the W.P.(C). and the respondents in the W.A. are the respondents in the W.P.(C).

3. Heard Sri.P.N.Mohanan, learned counsel appearing for the appellant in the W.A./petitioner in the W.P.(C)., Sri.P.C.Sasidharan, learned counsel appearing for R-1 & R-2 in the W.A./ R-1 & R-2 in the W.P.(C). and Sri.Saigi Jacob Palatty, learned Senior Govt. Pleader appearing for R-3 in the W.A./R-3 in the W.P.(C).

4. The prayers in the instant Writ Petition (Civil), W.P. (C).No. 25470/2019 are as follows:

"i) Call for the records leading to issue Ext.P-5 and quash the same by issuing a writ of certiorari or any other appropriate writ order or direction.

 WA 297/20                               - : 3 :-

      ii)    issue a writ of mandamus or any other appropriate writ order or

direction directing the respondents 1 and 2 to pay gratuity amounting to Rs.7 lakhs, leave surrender of 300 days of Rs. 5.50 lakhs, balance provident fund amount of Rs. 95,000/- welfare fund of Rs. 50,000/- security deposit of Rs. 10,000/- bonus of Rs. 3000/-

and salary arrears from 01.04.2014 to 30.4.2015 amounting to Rs. 1.25 lakhs with interest @ 12% as applicable to fixed deposits.

iii) to declare that no amount can be recovered from the petitioner in the light of Ext.P-5 certificate issued by the first respondent.

iv) Grant such other relief as this Hon'ble Court may deem fit and proper in the circumstances of the case."

5. The petitioner herein had retired from service of the 1 st respondent bank on 30.4.2015 and he was aggrieved by the withholding of the terminal benefits due to him like gratuity, leave surrender amount, balance provident fund amount, welfare fund, etc., in view of the issuance of Ext.P-5 liability certificate dated 17.8.2019 in pursuance of Ext.R-1(a) audit objections and has accordingly sought for directions from this Court for payment of those terminal benefits. The learned Single Judge after hearing both sides, has rendered the impugned judgment on 21.1.2020 dismissing the instant W.P.(C).No.24570/2019, on the ground that the petitioner may challenge the decision to issue Ext.P-5 liability certificate dated 17.8.2019 in pursuance of Ext.R-1(a) audit objections, by approaching the co-operative arbitration court under Sec.69 of the Kerala Co- operative Societies Act, 1969 and then seek for adjudication regarding his plea for release of terminal benefits, etc. It is the WA 297/20 - : 4 :-

abovesaid verdict of the learned Single Judge dismissing the above W.P.(C). that is under challenge in the instant intra court appeal.

6. A reference to the facts of this case would be pertinent and relevant. The petitioner had joined the service of the 1 st respondent bank on 28.7.1993 and had retired from the said service on 30.4.2015 while holding the post of Assistant Secretary. The pension application of the petitioner was considered by the statutory Pension Board and the petitioner is now getting a pension @ Rs.10,858/- per month.

According to the petitioner, he is legally entitled to get gratuity amount of Rs.7 lakhs, leave surrender of 300 days coming to Rs. 5.5 lakhs, balance provident fund amount of Rs. 95,000/-, welfare fund of Rs.50,000/-, security deposit of Rs. 10,000/-, bonus of Rs. 3,000/- etc. It is stated by the petitioner that the gratuity payment is regulated on the basis of an arrangement made by the 1 st respondent co-operative society bank with the Life Insurance Corporation of India and that now the petitioner has been informed as per Anx.A-2 letter dated 19.8.2021 issued by the LIC of India that the gratuity amount released by them to the 1 st respondent bank for payment to the petitioner is Rs.5,65,238/- and that the said amount has been credited on 12.5.2015 to the respondent society, etc. Further that the WA 297/20 - : 5 :-

pay and allowances applicable to the employees of the co-operative sector have been revised by the State Government w.e.f. 1.4.2014 as per G.O(P).No. 118/2015 dated 17.9.2015 and that the petitioner is also entitled to get arrears of salary for the period from 1.4.2014 to 30.4.2015 which comes to Rs. 1.25 lakhs in addition to the abovesaid terminal benefits. Since the abovesaid terminal benefits have not so far been released, the appellant has filed a series of representations as per Ext.P-1 dated 26.5.2015, Ext.P-2 dated 8.12.2015 and Ext.P-3 dated July, 2016 addressed to respondents 1 & 2. That since the abovesaid repeated pleas of the petitioner have not been acted upon by the respondents, the petitioner was constrained to approach this Court by filing a Writ Petition (Civil) as W.P.(C).No. 12597/2018, in which this Court had rendered Ext.P-4 judgment on 18.3.2015, whereby it was directed that respondents 1 and 2 shall issue liability or non liability certificate to the petitioner within one month in terms of Rule 198(8) of the Kerala Co-operate Societies Rules and further that, in case respondents 1 and 2 are of the stand that non liability certificate cannot be issued to him, then they may issue an order indicating the reasons as to why it cannot be done and the same shall be communicated to the petitioner so that he can have recourse to WA 297/20 - : 6 :-

appropriate remedies in law, etc.

7. Since the directions in Ext.P-4 judgment were not complied with, the petitioner was constrained to approach this Court by filing a contempt of court case as COC 1172/2019 [arising out of W.P.(C).No.12570/2018], in which this Court had passed an order dated 19.7.2019 directing that the petitioner may appear before R-1 and R-2 on 29.7.2019 for ensuring that the liability/non liability certificate may be issued. It is thereafter that the 1st respondent has issued Ext.P-5 letter dated 17.8.2019 informing that, in pursuance of Ext.R-1(a) audit objections, a liability of Rs.13,44,941/- has been quantified and fixed and that, as the petitioner has not cleared the said liability, non liability certificate cannot be issued, etc. The petitioner would further aver that the stand taken by respondents 1 and 2 in Ext.P-5 and Ext.R-1(a) are untenable and unsustainable in law.

8. Further that, Ext.P-6 is the special report issued by the 1 st respondent, which would only allege supervisory lapse on the part of the petitioner and no direct misconduct or delinquency is alleged as against the petitioner in respect of the matters covered by Ext.P-6, Ext.P-5 and Ext.R- 1(a), etc. Further that, Ext.R-1(a) audit objections WA 297/20 - : 7 :-

pertain to the period 2013-14 and that, when the petitioner was in charge of the Branch Manager/Assistant Secretary, he had put in a note to the Secretary of the 1 st respondent bank stating that some serious malpractices are being done at the behest of the two employees mentioned therein and that Ext.P-7 is the note submitted by the petitioner on 23.12.2008 to the 1 st respondent. That Ext.P-7 note given by the petitioner on 23.12.2008 has been acknowledged by the Secretary of the 1 st respondent bank on 29.12.2008. But that no action whatsoever was taken by R-1 and R-2 and later, one among the two employees was removed from service and the other person was allowed to continue in service. That in view of the provisions contained in Rule 47(d) of the Kerala Co-operative Rules, the Secretary and the Managing Committee of the bank cannot be absolved from their liabilities and if at all, liabilities referred to in Ext.P-5 and Ext.R-1(a) are to be finalised in accordance with law and the same has to be done through an independent process and not at the unilateral decision of respondents 1 and 2 and the liability, if any, should be apportioned between all the persons, who are so found liable, including the Secretary and members of the managing committee of the bank and the other employees, etc. and that the WA 297/20 - : 8 :-

present action imputing the entire liability covered by Ext.P-5 and Ext.R-1(a) on the appellant is absolutely illegal and unreasonable.

9. The petitioner has extracted the provisions contained in Rule 47 of the Kerala Co-operative Societies Rules in internal pages 3 and 4 of the present W.P.(C). Further, in spite of the communication given by the petitioner, as per Ext.P-7, as early as on 23.12.2008, no action whatsoever has been taken by the Secretary or members of the managing committee. Further that, the legal position is well settled that the Secretary has no power to quantify and fasten the liability against an employee without recourse to the statutory procedure contained in Sec.69 Kerala Co-operative Societies Act.

That, in the instant case, neither the statutory procedure for finalising surcharge proceedings under Sec.68 nor the determination of monetary liabilities in terms of Sec. 69 of the Kerala Co-operative Societies Act has been done even now and that merely on the basis of Ext.R-1(a) audit objections, respondents 1 and 2 cannot fasten the liability as per Ext.P-5 on the petitioner. Further that, no memo of charges for disciplinary action was ever issued against the petitioner by respondents 1 & 2 and hence, the scenario conceived by Rule 198(7) does not apply in the instant case. In the light of these aspects, WA 297/20 - : 9 :-

the main contention raised by the petitioner is that the matter in issue is covered in his favour by the dictum laid down by this Court in the decisions as in Kottayam District Co-operative Bank Ltd. v. Co-operative Tribunal [2018 (1) KLJ 636], Philip.C.M. v. Registrar of Co-operative Societies & Ors. [2018 (3) KHC 780 (DB)], Pappachan v. Oriental Kuries Ltd. [2017 (2) KHC 706], etc.

10. Per contra, it is submitted on behalf of respondents 1 and 2 that Ext.P-5 dated 17.8.2019 is the liability certificate issued by R-1 and R-2 in pursuance of Ext.R-1(a) audit objections and in case the petitioner has any disputes regarding the fixation and fastening of the liability alleged in Ext.P-5, it is for him to take proceedings for resolving such disputes in terms of Sec.69 of the Kerala Co-operative Societies Act and the issue as to whether the liability covered by Ext.P-5 is legally sustainable or not, is a matter that involves resolution of disputes, which ordinarily may not be done in writ jurisdiction and since alternative statutory and efficacious remedy is provided under Sec.69 of the Act, this Court may not interfere in the matter and that the learned Single Judge is right in dismissing the W.P.(C). on that ground.

WA 297/20 - : 10 :-

11. The pensionary benefits of the petitioner have already been cleared by the statutory Pension Board. The dispute is relating to withholding of pensionary benefits like gratuity, balance provident fund amount, etc. Further that the Payment of Gratuity Act, 1972, enacted by the Parliament, also confers power on the Gratuity Controlling Authority to entertain disputes regarding claims for payment of gratuity. Further that, the liability stated by the statutory auditor as per Ext.R-1(a) dated 7.12.2015 has not been challenged by the petitioner. Further that, the petitioner's pleas are not sustainable in the light of the provisions contained in Rule 198(7) and Rule 198(8) of the Kerala Co-operative Societies Rules. Further that, by virtue of the mandate contained in Rule 198(8), the issuance of non liability certificate is a pre-requisite for disbursal of terminal benefit like gratuity. Since what has been issued in the case of the petitioner is liability certificate as per Ext.P-5, there is no question of the petitioner having any right to claim payment of gratuity at this point of time without assailing Ext.P-5 in the manner known to law.

Further that, it is trite that only if there is a patent violation of the statutory provisions by the co-operative society that a writ may lie as against a co-operative society, as has been held by this Court in a WA 297/20 - : 11 :-

series of decisions including the one in Association of Milma Officers v. State of Kerala [2015 (1) KLT 849 (LB)].

12. We have heard both sides in extenso and have considered the rival submissions as well as the pleadings and materials on record.

13. In the instant case, while holding the post of Assistant Secretary, the appellant has retired from the service of the 1 st respondent bank on 30.4.2015 and the statutory pension Board has cleared his pension @ Rs.10, 858/- per month. The amounts that are withheld are the gratuity amounts, leave surrender benefits, balance provident fund, welfare fund, security deposit as well as pay revision arrears. The main ground cited by respondents 1 and 2 to justify the impugned action is on the basis of Ext.P-5 liability certificate dated 17.8.2019 issued in pursuance of Ext.R-1(a) audit objections dated 7.12.2015. It is common ground that no memo of charges for disciplinary action has ever been issued against the petitioner by respondents 1 and 2 in respect of the matters covered by Ext.R-1(a) audit objections and Ext.P-5 liability certificate.

14. A learned Single Judge of this Court has considered a similar issue in the case in Kottayam District Co-operative WA 297/20 - : 12 :-

Bank Ltd. v. Co-operative Tribunal [2018 (1) KLJ 636], copy of which has been produced as Ext.P-8 in this W.P.(C). In the said case, two other employees of the co-operative bank therein, other than the claimant employee, had permitted opening of a bank account without verifying the authenticity or identity documents of the account holder or without any prior introduction. Later, it was found that the claimant employee therein was also allegedly involved in some negligent transactions or colluded with the aforesaid other two employees and had passed mail transfers and an amount of Rs.4,48,287/- was successfully withdrawn. Accordingly, disciplinary action was initiated against the claimant employee and the other two employees concerned by framing charges. Enquiry was conducted and the inquiry officer presented his report, finding that the delinquent employees therein have not willfully committed any wrong. The inquiry report was approved by the board of management of the co-operative society and no proceedings were initiated. However, taking note of the audit objections regarding the alleged loss caused by the abovesaid employees, memo dated 8.7.2011 was issued to the claimant employee, who had retired from service on 30.4.2011, alleging that one third of the amount should be fastened as WA 297/20 - : 13 :-

his liability to be recovered from his retirement benefits. The aggrieved employee had also preferred an arbitration reference case and had secured an award, which was later upheld by the appellate Tribunal, wherein it was found in view of the clear cut finding in favour of the employee in the disciplinary inquiry proceedings, which was finalised by the managing committee of the bank. It was also held by the arbitration reference court that the bank has not initiated any proceedings before the arbitrator as per Sec.69 of the Kerala Co- operative Societies Act, 1969, to recover the alleged loss from the claimant employee concerned and that such action was never initiated by the bank even before the retirement of the claimant, etc. This Court, after considering the facts in para No.9 thereof has categorically held therein that without any conferment of power as per law, nobody is vested with the power to quantify the damages suo motu and recover the same unilaterally and that the procedure adopted by the management as per the impugned memo dated 8.11.2011 (Ext.P-3 therein) is illegal and ultra vires and is alien to the rule of law and it is a basic and well settled proposition of law that no person can be a judge of his own cause and that damages are matters to be adjudicated through the procedure established under WA 297/20 - : 14 :-

law. That none of the provisions contained in the Kerala Co-operative Societies Act and the rules framed thereunder confer any power on the co-operative society to unilaterally quantify damages and that too, without even providing any opportunity to the claimant employee concerned and that therefore it is illegal and ultra vires to quantify and recover the damages from the retiral benefits, as was proposed by the impugned action therein. This Court also held in para No.8 thereof that the only provision that enables the co-operative society employer to recover the loss, in a case of this nature, is by initiating disciplinary action in terms of Rule 198(1) of the Kerala Co-operative Societies Rules and after following the due procedure thereof and based on the factual evidence adduced in the disciplinary proceedings, the employer may be at liberty to inflict a penalty of recovery from the pay of the whole or any part of the pecuniary loss caused to the society by negligence or breach of orders or otherwise, as envisaged in clause (e) of Rule 198(1). In the said case, the disciplinary action ended in exoneration of the claimant employee therein. Further, no proceedings under Sec.69 of the Kerala Co- operative Societies Act was initiated by the employer bank against the employee for adjudication of the issue of liability and for recovery of WA 297/20 - : 15 :-

the said amount, etc. as per law. Hence, this Court categorically held in the decision in Kottayam District Co-operative Bank's case supra [2018 (1) KLJ 636] that the impugned action therein withholding the retirement benefits and the action to recover the alleged loss unilaterally by the bank, merely on the basis of statutory audit objections was held to be clearly illegal and ultra vires and this Court directed that steps shall be immediately taken by the employer bank to pay the due terminal benefits to the 3 rd respondent therein (retired employee). The abovesaid dictum laid down by the learned Single Judge of this Court in Kottayam District Co-operative Bank's case supra [2018 (1) KLJ 636] has been approved and relied on by a Division Bench of this Court in para No.7 of the case in Philip.C.M. v. Registrar of Co-operative Societies [2018 (3) KHC 780 (D.B)]. It will be pertinent to refer to paras 8 and 9 of the judgment of the learned Single Judge in Kottayam District co- operative Bank's case supra [2018 (1) KLJ 636], which read as follows:

"8. Learned counsel for the petitioner bank has invited my attention to the judgment of this court in Philip v. Registrar of Co-

operative Societies [2017(2) KLT 1087], wherein the recovery in respect of a proceeding initiated under rule 198 of the Rules, 1969 was considered. Learned counsel has placed heavy reliance on the said judgment and contended that, petitioner bank is entitled to recover the loss suffered by virtue of clause (e) of rule 198(1). However, the facts and circumstances involved in the said case has no bearing at all to the facts WA 297/20 - : 16 :-

and circumstances of this case due to the fact that, therein the employee was found guilty of misappropriation of employer's funds, a punishment of reduction in rank was imposed, with the punishment attaining finality, the employer, after the employee's retirement, sought to recover the embezzled amount from his terminal benefits. The question therein arose was whether having imposed a punishment of reduction in rank, a recovery is possible in accordance with clause (e), and a learned Single Judge of this court has found in favour of the bank and held that, recovery is possible in spite of imposition of the punishment of reduction in rank, in order to mitigate the loss suffered by the bank. The factual circumstances makes it explicitly clear that, the issue involved in this case is entirely different. Rule 198(1) deals with disciplinary action and the facts discussion would make it clear that in the disciplinary proceedings 3 rd respondent was not found guilty and he was exonerated fully. The recovery under clause (e) of rule 198(1) is possible only by way of imposition of punishment on the delinquent being found guilty. Such a circumstance is not occurring in the case on hand. Therefore, in my considered opinion, the concurrent findings rendered by the 2nd and 1st respondent respectively are in accordance with law.

9. Yet another point raised by the learned counsel for petitioner bank is that, bank is vested with every powers to recover the loss suffered by the bank. However, learned counsel could not point out any provision of law either under the Co-operative Societies Act or Rules empowering the Management to quantify damages allegedly suffered by the bank. When there is no power granted to the Board of Management to quantify the damages under the Statute or the Rules, the Board of Management is not at liberty to quantify damages allegedly suffered by the bank, especially when section 69 of the Co-operative Societies Act enables the bank to seek recovery of any damages from its employees by instituting appropriate proceedings. In my considered opinion, without any power conferred under law, nobody is vested with power to quantify the damages suo motu and recover the same unilaterally. The procedure adopted by the management as per Ext.P3, to recover the amount is strange and alien to rule of law. Moreover, it is basic and well settled proposition in law that no man can be a judge of his own cause. Damages is a matter to be adjudicated through a procedure established under law. Having not conferred with any power to quantify damages and that too without even providing an opportunity to the 3 rd respondent, petitioner committed grave illegality in quantifying and recovering the damages from the retiral benefits.

Resultantly, petitioner is not entitled to secure any relief as is sought for in the writ petition. Writ petition fails, accordingly it is dismissed. Consequently steps shall be taken to pay the amounts to the 3rd respondent at the earliest, since already six years have elapsed from the retirement of the 3rd respondent."

15. The Division Bench of this Court in para No.6 of the WA 297/20 - : 17 :-

decision in Philip.C.M.'s case supra [2018 (3) KHC 780 (DB)] has held that their Lordships of the Division Bench are in perfect agreement with the reasonings of the learned Single Judge in the abovesaid decision and that the employer bank cannot take unilateral steps purporting to quantifying the alleged misappropriated amounts and have it set off from the retiral benefits of the appellant, etc.

16. As mentioned herein above, the abovesaid issue has also been considered by the Division Bench of this Court in the case in Philip C.M. v. Registrar of Co-operative Societies [2018 (3) KHC 780 (D.B)]. In that case, disciplinary action was taken against the appellant therein, who was an employee of the respondent co- operative bank on the ground that the appellant, while working as Accountant, was privy to indiscriminate grant of loans by the then branch manager. The said disciplinary action, a punishment of reduction to the lower rank of Senior Clerk was imposed on him and the statutory appeal against the said penalty order was also rejected by the Board of Directors of the co-operative bank. Later the appellant retired from service of the bank on 30.4.2014 and the disbursement of retiral benefits like pension, gratuity, pay revision arrears, etc. were withheld. In para No.5 of the decision in WA 297/20 - : 18 :-

C.M.Philip's case supra the Division Bench held that their Lordships are unable to subscribe to the view of the learned Single Judge therein that the principles of unjust enrichment enables the employer bank to suo motu appropriate the amounts from the retiral benefits to recompense the alleged loss suffered by the employer. The Division Bench clearly held that a dispute of that nature as between the employer co-operative society bank and the employee, can be raised by the bank, even as against the retired employees going by the vast powers conferred under Sec. 69 of the Kerala Co-operative Societies Act and that for instituting such action, the mere retirement of the employee is immaterial. The Division Bench also noted therein that the employer bank had never raised such a dispute before the co- operative arbitration court under Sec.69 of the Act and has only issued a notice dated 25.11.2014, pending the writ petition. It was held by the Division Bench of this Court that the employer bank is debarred from being an arbiter in its own cause and the maxim that no person can be a judge of his own cause is too well known to be overlooked and that there is a real likelihood of bias if the Bank were to unilaterally appropriate the amounts from the retiral benefits after quantifying the damages. The principles of unjust enrichment WA 297/20 - : 19 :-

recognised in Secs.70 and 72 of the Indian Contract Act, 1872, cannot be imported to service jurisprudence, in the absence of specific rules and that the view taken by the learned Single Judge that principles of unjust enrichment and restitution enables the employer bank to unilaterally and suo motu appropriate amounts from the retiral benefits of the employee to recompense the alleged loss suffered by them, etc. cannot be imported in service jurisprudence. The Division Bench of this Court in Philip.C.M.'s case supra has also fully approved the dictum laid down by the learned Single Judge in Kottayam District Co-operative Bank's case supra [2018 (1) KLJ 636] as can be seen from a reading of para No.6 of Philip.C.M.'s case supra. Further the Division Bench of this Court in para No.7 of the decision in C.M.Philip's case supra [2018 (3) KHC 780 (DB)] has also clearly noted that the factual ingredients for invoking the power under Sec.4(6) of the Payment of Gratuity Act, 1972, were conspicuously absent in that case. The Division Bench has thus set aside the impugned judgment of the learned Single Judge in that case and had directed the respondent Joint Registrar to consider and pass orders on the representation of the retired employee, in the light of the abovesaid judgment. After hearing both sides, we note WA 297/20 - : 20 :-

that, in the instant case, no memo of charges has ever been issued against the appellant by the respondent co-operative bank on the allegations covered by Ext.R-1(a) audit objections and Ext.P-5 liability certificate. Ext.P-5 is a liability certificate unilaterally fixed by the 1st respondent bank, on the basis of Ext.R1(a) audit objections. Further, it has also been noted that the appellant has a specific case that, even going by Ext.P-7 report and Rule 47 of the Kerala Co- operative Societies Rules, Secretary, members of the managing committee and all other employees have to face liability, after the liability is fixed in accordance with law and that therefore, in the instant case fastening the entire liability on the petitioner is illegal and ultra vires, etc.

17. It is also common ground that, till date no proceedings have been initiated by the respondent employer bank under Sec. 69 of the Kerala Co-operative Societies Act against the appellant in the matter of fixation of alleged liability and consequential recovery of money. So also, no action whatsoever has been initiated for surcharge proceedings in terms of Sec. 68 of the Act.

18. Rule 198(7) of the Kerala Co-operative Societies Rules, reads as follows:

 WA 297/20                                  - : 21 :-

      "Rule 198. Disciplinary Action.- (1)....

                     xxx             xxx               xxx

"(7):- In the event of any pendancy of disciplinary proceedings against any employee of a co-operative society or any co-operative institution pursuant to any charge of grave misconduct, irregularity, corruption or other charge involving moral turpitude, no retirement benefits shall be sanctioned to such employee or retired employee and in case of sanctioning of any retirement benefits to any such employee or retired employee, the name and designation of the sanctioning authority together with the reason for such sanctioning shall be recorded by the sanctioning authority by himself and such authority shall be held responsible for any loss to the society owing to such sanctioning of retirement benefits if found that such sanctioning was unwarranted." At the out set it has to be noted that Rule 198(7) can be pressed into service only if disciplinary action was pending against the employee concerned, pursuant to a memo of charge of grave misconduct, irregularity, corruption or other charges involving moral turpitude as envisaged under Rule 198(7). In the instant case, no memo of charge for disciplinary action was ever issued against the petitioner by the respondent employer. So, it is to be only held that Rule 198(7) of the Kerala Co-operative Societies Rules cannot be pressed into service, in the facts and circumstances of the present case.

19. It is argued by the respondents that the impact of Rule 198(8) of the Kerala Co-operative Societies Rules has not been considered by this Court in the aforecited decisions. Rule 198(8) of the Kerala Co-operative Societies Rules reads as follows:

"Rule 198. Disciplinary Action.- (1)....

 WA 297/20                                 - : 22 :-

                     xxx            xxx               xxx

               (8)     In respect of all employees save the Chief Executive Officer

of a society, no retirement benefits shall be sanctioned and disbursed until after the due issuance of a non-liability certificate by the Chief Executive Officer and approval of the same by the committee of the society within thirty days from the date of retirement of such employee. In the event of the retirement of the Chief Executive Officer, the non- liability certificate shall be issued by the committee of the Society. For any loss to the society due to the non-adherence of the forgoing procedure, the Chief Executive Officer along with the committee of the society shall be held responsible collectively and severally in respect of the issuance of Non-liability Certificate to any employee other than the Chief Executive Officer and the members of the committee shall be held collectively and severally responsible for the issuance of Non-liability Certificate to the Chief Executive Officer."

The first part of Rule 198(8) stipulates that, in the case of all the employees, other than the Chief Executive Officer of a society, no retirement benefits shall be sanctioned and disbursed, until after the due issuance of a non-liability certificate by the Chief Executive Officer and approval of the same by the committee of the society within thirty days from the date of retirement of such employee. Futher that, in the event of the retirement of the Chief Executive Officer, the non-liability certificate shall be issued by the committee of the society, etc. Further provision thereof says that, for any loss to the society, due to the non-adherence of the abovesaud procedure, the Chief Executive Officer, along with the committee of the society, shall be held responsible, collectively and severally, in respect of the issuance of Non-liability Certificate, etc. The said provision is not relevant in the present case. The most relevant part of Rule 198(8), as WA 297/20 - : 23 :-

regards the facts of this case, is the first part thereof. The said provision stipulates that no retirement benefits shall be sanctioned and disbursed until after the due issuance of a non-liability certificate by the Chief Executive Officer and approval of the same, by the committee of the society within thirty days from the date of retirement of such employee. The said provision does not confer any power on the co-operative employer bank to indefinitely postpone issuance of the non liability certificate. It is also all the more so, as the terminal benefits, like pension, gratuity, etc., are proprietary rights of the pensioner concerned and Art.300A of the Constitution of India explicitly mandates that no person shall be deprived of his property save by the authority of law. The said provision clearly mandates that such non-liability certificate will have to be issued by the competent authority within 30 days from the date of retirement of such employee. So Rule 198(8) only mandates that the non-liability certificate has to be issued within 30 days from the date of retirement of the employee/pensioner concerned.

20. Respondents 1 and 2 have raised a contention that even if liabilities are not fixed before the retirement of the employee, they still have the power to fix it later. There is no necessity for us to WA 297/20 - : 24 :-

resolve the said issue for the simple reason that even if it is assumed that the employer bank has any such discretion in that regard, still statutory provisions contained in Rule 198(8) clearly mandate that the said process of issuance of liability certificate has to be completed within the outer time limit of 30 days from the date of retirement of the pensioner concerned. In the instant case, the appellant has retired from service of the 1st respondent bank as early as on 30.4.2015. Even going by the case of respondents 1 and 2, they have issued the liability certificate as per Ext.P-5 only on 17.8.2019. The said action has been taken by them well after the expiry of the statutory outer time limit of 30 days from the date of retirement of the appellant employee, which in the instant case, has expired on 31.5.20215, ie. 30 days from the date of retirement on 30.4.2015.

21. There is yet another aspect of the matter. It is common ground that the Payment of Gratuity Act, 1972 (Central Act 39 of 1972) is applicable in the instant case. The overriding effect of the Payment of Gratuity Act, 1972, in view of Sec. 14 thereof has been dealt with in detail by a Full Bench of this Court in the decision in Chandrasekharan Nair. G. & Ors. v. Kerala State Co-


operative     Agrl. & Rural Development Bank Ltd., [2017 (4)
 WA 297/20                        - : 25 :-

KLT 276]. Sec.4(1) of the said Act enacted by the Parliament stipulates that 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, etc. Sec.7(3) of the said Act further mandates that 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. Sec.7(3A) thereof further mandates that if the amount of gratuity payable under Sec.7(3) is not paid by the employer within the period specified in Sec. 7(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 prescribe. Proviso thereto stipulates 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 this ground.

22. The Parliament has framed yet another provision as in Sec. 4(6) thereof which reads as follows:

 WA 297/20                                 - : 26 :-

      "Sec.4. Payment of gratuity.-- (1)....

                     xxx            xxx               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."

In the instant case, respondents 1 and 2 have no case whatsoever that disciplinary action was ever initiated against the petitioner for the allegations contained in Ext.R-1(a), Ext.P-5, etc. So, there is no question of invoking the provisions contained in Sec. 4(6). Further, Sec.13 of the Payment of Gratuity Act, 1972 clearly mandates that no gratuity payable under the said Act shall be liable to attachment in execution of any decree or order of any civil, revenue or criminal court. So, the only exception to the immunity against attachment, etc. as per Sec. 13 is by taking recourse to the statutory procedure permitted in terms of Sec. 4(6) thereof.

23. After hearing both sides, this Court is of the view that as WA 297/20 - : 27 :-

the Central Act would have overriding effect and as Sec.7(3) mandates that the gratuity amount has to be paid within 30 days from the date on which it become payable, ie. 30 days from the date of retirement, etc., the State rule making authority has also consciously provided in Rule 198(8) that the non-liability certificate has to be issued within an outer time limit of 30 days from the date of retirement of the employee/pensioner concerned. In the light of these aspects, this Court is of the considered view that the dictum laid down by this Court in decisions as in Kottayam District Co- operative Bank's case supra [2018 (1) KLJ 636], C.M.Philip's case supra [2018 (3) KHC 780 (DB)] would apply to the facts of this case as well and the said dictum laid down by this Court in those aforecited decisions does not require any reconsideration. Hence we are of the view that the appellant is legally entitled to get the full amount of his gratuity.

24. In the instant case, we have already noted that, in view of Sec. 13, no gratuity payable under the said Act shall be liable to attachment in execution of any decree or order of any civil, revenue or criminal court, etc. and that the only way for forfeiture or permanent withholding of gratuity is by following the procedure permitted in WA 297/20 - : 28 :-

terms of Sec. 4(6) thereof. In the instant case, there is no dispute that the factual ingredients for invoking Sec.4(6) are fully and conspicuously absent. Therefore, the appellant is entitled to secure release of the full amount of gratuity due to him.

25. Moreover, as in the aforecited decisions, in this case as well, the alleged liability based on the statutory audit has been unilaterally fixed by the respondent co-operative society employer as per Ext.P-5 liability certificate and without any independent adjudication as per law. Hence, the dictum laid down by this Court in the aforecited decisions as in Kottayam District Co-operative Bank's case supra [2018 (1) KLJ 636], C.M.Philip's case supra [2018 (3) KHC 780 (DB)] will apply to the facts and circumstances of this case as well.

26. A larger issue has been raised before us as regards the applicability or otherwise of the dictum laid down regarding the invocation of Sec.4(6) of the Central Payment of Gratuity Act, in decisions as in Chairman-cum-Managing Director, Mahanadi Coalfields Ltd. v Rabindranath Choubey [AIR 2020 SC 2978], Viswanathan v. FACT [2021 (4) KLT 855 (DB)], etc. It is urged by Sri.P.N.Mohanan, learned counsel appearing for the appellant that WA 297/20 - : 29 :-

the said dictum laid down in the aforecited decisions regarding the invocation of Sec.4(6) of the Central Payment of Gratuity Act, 1972, will not apply to the facts and circumstances of this case, inasmuch as there are no provisions in the Kerala Co-operative Societies Rules for post-retiral continuance of disciplinary proceedings initiated before the retirement of an employee inasmuch as, unlike the facts of those reported cases, the Kerala Co-operative Societies Rules do not have any provisions or rules for continuance of disciplinary action even after the retirement of an employee, in cases where the said disciplinary action was initiated before the retirement of the incumbent. It is pointed out that the Conduct, Discipline & Appeal Rules (CDA Rules) in Mahanadi Coalfields Ltd' case supra [AIR 2020 SC 2978] and in FACT's case supra [2021 (4) KLT 899 (DB)] clearly provided that disciplinary proceedings, if instituted while the employee was in service, whether before his retirement or during his reemployment shall, after the final retirement of the employee, be deemed to be the proceedings and shall be continued and concluded by the authority by which it was commenced in the same manner as if the employee had continued in service, etc. The CDA Rules considered by the Apex Court in Mahanadi Coalfields' case supra WA 297/20 - : 30 :-

[AIR 2020 SC 2978] are contained in para 6 of the said decision, which reads as follows:

"6.......

"34.2 Disciplinary proceeding, if instituted while the employee was in service whether before his retirement or during his reemployment shall, after the final retirement of the employee, be deemed to be proceeding and shall be continued and concluded by the authority by which it was commenced in the same manner as if the employee had continued in service.

34.3 During the pendency of the disciplinary proceedings, the Disciplinary Authority may withhold payment of gratuity, for ordering the recovering from gratuity of the whole or part of any pecuniary loss caused to the company if have been guilty of offences/ misconduct as mentioned in Subsection (6) of Section 4 of the payment of gratuity act, 1972 or to have caused pecuniary loss to the company by misconduct or negligence, during his service including service rendered on deputation or on re-employment after retirement. However, the provisions of Section 7(3) and 7(3A) of the Payment of Gratuity Act 1972 should be kept in view in the event of delayed payment in the case the employee is fully exonerated.

xxx xxx xxx"

CDA Rules considered by a Division Bench of this Court in FACT's case supra [2021 (2 KLT 899(D.B)] are contained in para 8 thereof, which reads as follows:

"8. The Rules in this case given as per Ext.R2(a) produced at page No.129 of the paper book of W.A.No.2500/2015 read as follows:

"Rule 32 (i) Disciplinary proceedings, if instituted while the employee was in service whether before his retirement or during his re- employment, shall after the final retirement of the employee, be deemed to be proceeding and shall be continued and concluded by the authority by which it was commenced in the same manner as the employee had continued in service.

(ii) During the pendency of the disciplinary proceeding, the disciplinary authority may withhold payment of gratuity in accordance with sub-section (6) of Section (4) of the Payment of Gratuity Act, 1972."

27. It is also pointed out by the appellant's counsel that there WA 297/20 - : 31 :-

are no provisions in the Kerala Co-operative Societies Rules either in Rule 198 thereof or in any other provisions thereof, which are similar to the CDA Rules considered in Mahanadi Coalfields Ltd's case supra [AIR 2020 SC 2978] and in FACT's case supra [2021 (2 KLT 899(D.B)]. Hence, it is urged that the dictum laid down in those decisions regarding the applicability of Sec.4(6) of the Central Payment of Gratuity Act, will not be applicable in the facts and circumstances of this case. It is also brought to our notice that earlier a 3-judge of the Apex Court in State Bank of India v. Ram Lal Bhaskar & Anr. [(2011) 10 SCC 249, para 9] had considered the case of a claimant employee in the State Bank of India, wherein Rule 19(3) of the SBI Officers Service Rules, 1992, provided that in case disciplinary proceedings under the relevant rules of service have been initiated against an officer before he ceased to be in the Bank's service by the operation of, or by virtue of, any of the rules or the provisions of the rules, the disciplinary proceedings may, at the discretion of the Managing Director, be continued and concluded by the authority by which the proceedings were initiated, in the manner provided for in the rules as if the officer continues to be in service, so however, that he shall be deemed to be in service only for the purpose of the WA 297/20 - : 32 :-

continuance and conclusion of such proceedings, etc.

28. The Apex Court held in SBI's case supra [(2011) 10 SCC 249] that, as already held by the Apex Court in a previous decision in UCO Bank v. Rajinder Lal Capoor [(2007) 6 SCC 694], the said provision can be invoked only when the disciplinary proceedings had been initiated prior to the delinquent ceased to be in service. So, it can be seen that as per the rules in those cases, further continuance of the disciplinary action can be continued only in a case where the memo of charges for disciplinary action has been initiated before the retirement of the delinquent and not thereafter. In the instant case, there is no dispute that no memo of charges has ever been initiated against the petitioner at any point of time for the allegations contained in Ext.R-1(a) and Ext.P-5, etc. Hence, there is no necessity for us to examine the abovesaid larger issue as to the applicability or otherwise of the dictum laid down regarding the invocation of Sec. 4(6) based on CDA Rules concerned as per the decisions in Mahanadi Coalfields Ltd's case supra [AIR 2020 SC 2978] and in FACT's case supra [2021 (2 KLT 899(D.B)]. The said larger issue will arise in the case of a retired employee of a co-operative society regulated by the Kerala Co-operative Societies Rules only in a WA 297/20 - : 33 :-

case where the employer may take a stand that they had issued memo of charges for disciplinary action before the retirement of the employee and that therefore they have the right to continue the disciplinary proceedings even after the retirement of the delinquent by placing reliance on the dictum laid down in the aforecited decisions as in Mahanadi Coalfields Ltd's case supra [AIR 2020 SC 2978] and in FACT's case supra [2021 (2 KLT 899(D.B)]. In such a case, the affected pensioner concerned may take a rival plea that there are no provisions in the Kerala Co-operative Societies Rules, which are similar to the CDA Rules considered in Mahanadi Coalfields Ltd's case supra [AIR 2020 SC 2978], SBI's case supra [(2011) 10 SCC 249], etc. Only in such a scenario, such an issue actually arises for consideration and only in such appropriate cases, is there any necessity to decide and resolve any such issue. Since the said larger issue does not arise in the facts of this case, there is no necessity for us to delve any further into those aspects. For the same reasons, the issue regarding the applicability or otherwise of the dictum laid down by the Apex Court in Secretary, LSGD Dept. & Ors. v. K.Chandran [2022 Live Law (SC) 285 = 2022 (2) KLT 370(SC)] does not arise in the facts of this case. Moreover, there is no provision WA 297/20 - : 34 :-

in the Kerala Co-operative Society Rules akin to Rule 3, Part III KSR, which permits not only post-retiral continuance of pre-retiral disciplinary proceedings, but also initiation of post-retiral departmental proceedings, even where such pre-retiral proceedings had not been initiated, subject to the conditions in that rule, etc.

29. Further, the learned counsel for the appellant has also raised a contention based on the provisions contained in Sec.13 of the Payment of Gratuity Act, 1972 as well as in view of Sec.11 of the Pension Act, Sec.10 of the Employees' Provident Fund & Miscellaneous Provisions Act as well as Sec. 60 of the Civil Procedure Code that no amounts payable as gratuity, pension, provident fund, etc. are liable to attachment in execution of any decree or order of any civil, revenue or criminal court, etc. Hence it is urged that even if the respondent employer takes any action in future for recovery of the alleged monetary liabilities, by resort to the provisions under Secs.69, 68, 76, etc., of the Kerala Co-operative Societies Act, such terminal benefits like gratuity, pension, provident fund, etc. are not liable for attachment in execution of any such decree or order, etc. Sec. 13 of the Payment of Gratuity Act, 1972, reads as follows:

"Sec. 13. Protection of gratuity.- No gratuity payable under this Act and no gratuity payable to an employee employed in any establishment, factory, mine, oilfield, plantation, port, railway company WA 297/20 - : 35 :-

or shop exempted under section shall be liable to attachment in execution of any decree or order of any civil, revenue or criminal court."

Sec.10 of the Employees' Provident Fund & Miscellaneous Provisions Act, 1952, provides as follows:

"Sec.10. Protection against attachment.--(1) The amount standing to the credit of any member in the Fund or of any exempted employee in a provident fund] shall not in any way be capable of being assigned or charged and shall not be liable to attachment under any decree or order of any court in respect of any debt or liability incurred by the member or the exempted employee, and neither the official assignee appointed under the Presidency-towns Insolvency Act, 1909 (3 of 1909), nor any receiver appointed under the Provincial Insolvency Act, 1920 (5 of 1920), shall be entitled to, or have any claim on, any such amount.

(2) Any amount standing to the credit of a member in the Fund or of an exempted employee in a provident fund at the time of his death and payable to his nominee under the Scheme or the rules of the provident fund shall, subject to any deduction authorised by the said Scheme or rules, vest in the nominee and shall be free from any debt or other liability incurred by the deceased or the nominee before the death of the member of the exempted employee and shall also not be liable to attachment under any decree or order of any court.

(3) The provisions of sub-section (1) and sub-section (2) shall, so far as may be, apply in relation to the pension or any other amount payable under the Pension Scheme and also in relation to any amount payable under the Insurance Scheme as they apply in relation to any amount payable out of the Fund."

Sec.11 of the Pensions Act, 1871 (Central Act 23 of 1871) provides as follows:

"Sec.11. Exemption of pension from attachment.- No pension granted or continued by Government on political considerations, or on account of past services or present infirmities or as a compassionate allowance, and no money due or to become due on account of any such pension or allowance, shall be liable to seizure, attachment or sequestration by process of any Court at the instance of a creditor, for any demand against the pensioner, or in satisfaction of a decree or order of any such Court.

This section applies also to pensions granted or continued", after the separation of Burma from India, by the Government of Burma."

Sec. 60(1) of the Code of Civil Procedure, 1908, and Explanation WA 297/20 - : 36 :-

(1) thereunder provide as follows:

"Sec.60. Property liable to attachment and sale in execution of decree (1) ......

Provided that the following particulars shall not be liable to such attachment or sale, namely;-

(a) ......

xxx xxx xxx

(g) stipends and gratuities allowed to pensioners of the Government or of a local authority or of any other employer], or payable out of any service family pension fund notified in the Official Gazette by the Central Government or the State Government] in this behalf, and political pensions;

Explanation 1. The moneys payable in relation to the matters mentioned in clauses (g), (h), (i), (ia), (j), (l) and (o) are exempt from attachment or sale, whether before or after they are actually payable, and, in the case of salary, the attachable portion thereof is liable to attachment whether before or after it is actually payable.

xxx xxx xxx"

30. The scope and impact of proviso (g) to Sec. 60(1) of the C.P.C. and Explanation I thereunder have been considered by the Apex Court in decisions as in Radhey Shyam Gupta v. Punjab National Bank & Anr. [(2009) 1 SCC 376]. Therein, the Apex Court, having regard to the provisions contained in Sec. 60(1) proviso

(g) of the CPC, has held that the High Court, in the impugned judgment therein, has committed a jurisdictional error in directing that a portion of the decretal amount be satisfied from the fixed deposit receipts of the appellant therein held by the bank. Thus, it has been held by the Apex Court therein that the High Court has WA 297/20 - : 37 :-

erred particularly when the pension and gratuity of the appellant, which has been converted into fixed deposits could not be attached under the provisions of the CPC and it has been categorically held therein by the Apex Court that even after the payment of retiral benefits, such as pension and gratuity had been received by the appellant, they did not lose their character and continued to be covered by Sec. 60(1) C.P.C. Proviso (g). It will be pertinent to refer to paras 33 and 35 of the decision in Radhey Shyam Gupat's case supra [(2009) 1 SCC 376], which read as follows:

"33. However, we are also of the view that having regard to proviso (g) to Section 60(1) of the Code, the High Court committed a jurisdictional error in directing that a portion of the decretal amount be satisfied from the fixed deposit receipts of the appellant held by the Bank. The High Court also erred in placing the onus on the appellant to produce the Matador in question for being auctioned for recovery of the decretal dues. In other words, the High Court erred in altering the decree of the trial court in its revisional jurisdiction, particularly when the pension and gratuity of the appellant, which had been converted into fixed deposits, could not be attached under the provisions of the Code of Civil Procedure. The decision in Jyoti Chit Fund case [(1976) 3 SCC 607] has been considerably watered down by later decisions which have been indicated in para 22 hereinbefore and it has been held that gratuity payable would not be liable to attachment for satisfaction of a court decree in view of proviso (g) to Section 60(1) of the Code.

xxx xxx xxx

35. We also agree with Ms Shobha that even after the retiral benefits, such as pension and gratuity, had been received by the appellant, they did not lose their character and continued to be covered by proviso (g) to Section 60(1) of the Code. Except for the decision in Jyoti Chit Fund and Finance case [(1976) 3 SCC 607] , where a contrary view was taken, the consistent view taken thereafter supports the contention that merely because of the fact that gratuity and pensionary benefits had been received by the appellant in cash, it could no longer be identified as such retiral benefits paid to the appellant."

WA 297/20 - : 38 :-

31. In view of the abovesaid provisions contained in Sec. 13 of the Payment of Gratuity Act, 1972, Sec. 60(1) proviso (g) of the CPC, Sec. 10 of the EPF Act, etc. such retiral benefits like gratuity, provident fund, etc, are not liable for attachment in the adjudicatory proceedings. The abovesaid position of law is elementary and is clarified and declared. So, even if respondents 1 and 2 propose to initiate any such proceedings under the Kerala Co-operative Societies Act, such proceedings that may be initiated in future cannot be a bar for this Court to direct the release of the pensionary benefits like gratuity provident fund, etc. in this case.

32. In the judgment dt.18.3.2019 in W.P.(C).No. 3915/2011, the learned Single Judge has held that the respondent employee- society therein is given liberty to approach the competent arbitrator/ arbitration court under Sec.69 of the Kerala Co-operative Society Act, 1969 and to obtain necessary orders/awards against the petitioner in accordance with law within the time frame fixed therein and if they are unable to do so, then it was directed that the writ petitioner should be paid the retirement benefits without further delay. In view of abovesaid provisions contained in Sec. 13 of the Payment of Gratuity Act, Sec. 10 of the EPF Act, Sec. 60 (1) of the CPC, etc., the WA 297/20 - : 39 :-

abovesaid retiral benefits like gratuity, provident fund, etc. cannot be subject matter of attachment in any such adjudicatory proceedings. Hence, we are of the opinion that the view rendered by the learned Single Judge as per the judgment dated 18.3.2019 in W.P. (C).No.3915/2018 does not reflect the correct legal position to the extent it permits temporary withholding of gratuity till adjudication as per Sec. 69 of the KCS Act and the same will stand overruled.

33. The learned counsel for the appellant has raised yet another contention that Ext.R-1(a) audit objections is for the year 2014-15 and has been issued on 7.12.2015 and therefore, if respondents 1 and 2 were to file an arbitration reference case in terms of Sec. 69 of the Kerala Co-operative Societies Act, 1969, for recovery of the abovesaid alleged monetary liabilities, then it should have been filed within the prescribed period of limitation. That, going by the period of limitation of three years prescribed in Schedule No.III appended under Sec.69(4) of the Act or going by the provisions contained in the Limitation Act, the period of limitation has expired long ago. Further that, the arbitration reference case in terms of Sec.

69 is in lieu of the suit. That could have been otherwise filed before the civil court, going by the provisions contained in Secs. 100 and 69 WA 297/20 - : 40 :-

of the Kerala Co-operative Societies Act and that civil court's jurisdiction is thus time barred. That, in view of the expiry of the limitation period, such proceedings cannot be initiated under Sec.69 of the Kerala Co-operative Societies Act after such a long lapse of time. Further that surcharge proceedings as envisaged in Sec.68 of the Kerala Co-operative Societies Act, will also have to be initiated within a reasonable period of time and the said reasonable period has expired long ago. There is no necessity for us to resolve this issue for the simple reason that even now, respondents 1 and 2 have not initiated any proceedings as contemplated in Sec.69 or Sec. 68 of the Kerala Co-operative Societies Act. However, we make it clear that nothing in this judgment by itself will preclude respondents 1 and 2 for initiating any such proceedings as per the Kerala Co-operative Societies Act, 1969 and if any such proceedings are initiated, then the appellant herein will be at liberty to raise the plea of bar of limitation or any other objections, etc. and it is for the said forum to consider such plea in such appropriate proceedings that may be initiated by the respondent society at a later point of time and the said plea regarding limitation bar is left open to be raised in such appropriate proceedings in the manner known to law.

WA 297/20 - : 41 :-

34. Now we have to consider the consequential directions to be issued in this case. The main retiral benefits withheld in the instant case are the gratuity amounts and the balance provident fund amounts. Sec.7(3A) of the Payment of Gratuity Act, 1972 and its proviso provide as follows:

"Sec. 7. Determination of the amount of gratuity: (1)....

xxx xxx xxx (3A) 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:

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 this ground."

35. The plea for payment of statutory interest as per the provisions contained in Sec.7(3A) has been considered in detail by a Division Bench of this Court in Viswanathan v. FACT [2021 (2) KLT 899]. Paras 11 and 12 thereof read as follows:

"11. It is mandated in sub-section (3-A) of Section 7 of the Payment of Gratuity Act that if the amount of gratuity payable under sub-section (3) of Section 7 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 the Government may, by notification specified. Proviso to sub-section (3- A) says 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 WA 297/20 - : 42 :-

payment on this ground. In the instant case, there cannot be any dispute that the proviso to Section 7(3-A) will apply. It has been already held by the Apex Court in the aforecited decision in Mahanadi Coalfields Ltd.'s case supra (2020 (3) KLT OnLine 1109 (SC) = AIR 2020 SC 2978) that where ultimately the employee is exonerated consequent to finalisation of the disciplinary proceedings after the retirement as provided under the Rules, then the employee is entitled for interest in terms of Section 7(3-A) of the Payment of Gratuity Act, 1972. We have requested both sides to ascertain and make available copies of the notification issued by the Union Government under Section 3(A) and Section 7(3-A) of the Payment of Gratuity Act in the matter of regulating the interest payable in terms of that provision. Learned counsel appearing for the appellant has made available a photocopy of a notification issued by the Union Government on 01.10.1987 and published in Gazette of India extraordinary dated 01.10.1987 and issued as S.O.No.874/E stating that the said notification is issued in exercise of the powers conferred by sub- section (3A) of Section 7 of the Payment of Gratuity Act, 1972 [Central Act 39 of 1972], that the Central Government specifies ten percent per annum as the rate of simple interest payable for the time being by the employer to his employee in cases where the gratuity is not paid within the specified period, etc. The respondent authorities have not placed reliance on any notification issued, which may have been issued subsequently superseding the said notification either by way of enhancement or reduction of the interest rate.

12. In a recent decision rendered by a Division Bench of this Court, various judgments of the Apex Court and this Court in the matter of award of interest for delayed payment of gratuity in terms of the Payment of Gratuity Act had been considered. The said decisions are State of Kerala & Ors. v. M.Padmanabhan Nair (1985 KLT 86 (SC) = (1985) 1 SCC 429), wherein 12% interest has been granted, in O.P.Gupta v. Union of India & Ors. (1987 (2) KLT OnLine 1117 (SC) = (1987) 4 SCC

328) 12% interest was awarded, in Vijay L. Mehrotra v. State of U.P. (2000 (1) KLT OnLine 944 (SC) = 2000 (2) SLR 686 (SC)), the Apex Court has awarded 18% interest for the delayed payment of gratuity in that case. In Gorakhpur University & Ors. v. Shitla Prasad Nagendra and Ors. (2001 (3) KLT SN 15 (C.No. 20) SC = (2001) 6 SCC 591), 18% interest has been awarded, in H.Gangahanume Gowda v. Karnataka Agro Industries Corpn. Ltd. (2003 (1) KLT OnLine 1151 (SC) = (2003) 3 SCC 40) = AIR 2003 SC 1526), the Apex Court has awarded 10% interest with a cost of Rs. 10,000/-. In the case of Kerala State Cashew Development Corporation Ltd. and Anr. & V. N.Asokan (2009 (3) KLT OnLine 1122 (SC) = (2009) 16 SCC 758), the Apex Court has held that interest shall be paid in accordance with the provisions contained in Section 7(3-A) of the Payment of Gratuity Act. 9% interest has been awarded in D.D.Tewari v. Uttar Hariyana Bijli Vitran Nigam Ltd. & Ors. (2014 (4) KLT Suppl. 48 (SC) = (2014) 8 SCC 894), in State of Uttar Pradesh & Ors. v. Dhirendra Pal Singh (2016 (4) KLT OnLine 2076 (SC) = (2017) 1 SCC 49), the Apex Court has ordered 8%. A Division Bench of this Court in the case in University of Kerala v. Dr.V.Sobha Sreemangalam (2020 (3) KLT SN 7 (C.No.10) = 2020 (1) KLT OnLine WA 297/20 - : 43 :-

1162 = (2020) SCC Online Ker.949 (D.B.)) has after considering various decisions ordered that 9% interest may be given for the delayed payment of gratuity covered by the provisions contained in the Payment of Gratuity Act, 1972."

In the light of the abovesaid aspects, we are of the view that the claim for payment of interest for delayed payment of gratuity is statutorily backed by the provisions contained in Sec. 7(3A) supra.

36. Sec. 7(3-A) of the Payment of Gratuity Act, 1972 entitles the retired employees to claim on the delayed payment of gratuity, at such rate not exceeding the rate notified by the Central Government from the time to time. The rate notified by the Central Government on the abovesaid provision is 10% per annum. So the said interest at the rate of 10% per annum is the upper limit and the same rate need necessarily be the rate in all cases.

37. After considering various aspects, including the financial condition of the employer, we had directed that the pensioner concerned, in the FACT's case supra should be given interest @ 8% per annum for the period upto the date of disbursal of the gratuity.

Taking into consideration the fact that the employer in the present case is a co-operative society, we are of the view that the ends of justice would be subserved by directing that the interest be paid @ 8% per annum. Though the appellant has initially averred in the W.P. WA 297/20 - : 44 :-

(C)., that the full gratuity amount due to him is Rs. 7 lakhs, he has averred in the present writ appeal that, going by Anx. A-2 letter dated 19.8.2021 issued by the LIC of India, the gratuity amount due to him is Rs. 5,65,238/-, etc. Accordingly, it is ordered that respondents 1 and 2 will release the full gratuity amount due to the petitioner without any further delay, at any rate, within one month along with interest thereon @ 8% per annum for the period from 1.6.2015 (30 days from the date of retirement of the appellant on 30.4.2015) upto the date of actual disbursal. So also, the balance provident fund amount due to the petitioner should also be released by respondents 1 and 2 to the appellant within one month and the said amount will carry interest @ 8% per annum for the period from 1.6.2015 upto the date of its disbursal. The other benefits claimed by the petitioner are leave surrender salary benefits, welfare fund, security deposit, bonus, salary arrears, etc. and those benefits cannot be strictly termed as retiral benefits. Hence, we give liberty to the appellant to approach the 3rd respondent Joint Registrar of Co-operative Societies, seeking for directions for disbursal of those remaining benefits and the plea for interest in that regard is left open to be raised by him in such proceedings. The appellant may prefer such petition before the 3 rd WA 297/20 - : 45 :-

respondent Joint Registrar of Co-operative Societies, claiming for such benefits within 4 to 6 weeks from the date of receipt of a certified copy of this judgment and thereafter, the 3 rd respondent Joint Registrar will afford reasonable opportunity of being heard to the appellant as well as respondents 1 and 2 and then pass appropriate orders and directions thereon, in accordance with law, within an outer time limit of two months from the date of receipt of such petition. However, we make it clear that if the abovesaid gratuity amounts and provident fund amounts are not released to the petitioner within the abovesaid period of one month stipulated above from the date of production of a copy of this judgment, then the abovesaid amounts of gratuity and provident fund amount will carry interest @ 10 % per annum.

38. The upshot of the above discussion leads to the following conclusions:

(a) The matter in issue is covered in favour of the appellant as per the dictum laid down by this Court in decisions as in Kottayam District Co-operative Bank's case supra [2018 (1) KLJ 636], C.M.Philip's case supra [2018 (3) KHC 780 (DB)], etc.

(b) Rule 198(7) Kerala Co-operative Societies Rules has no WA 297/20 - : 46 :-

application in the facts and circumstances of this case inasmuch as no memo of charge for disciplinary action was issued to the petitioner for the allegations covered by Ext.P-5 and Ext.R-1(a) audit objections at any point of time.

(c) The ingredients in Sec. 4(6) of the Central Payment of Gratuity Act are fully and conspicuously absent in this case. In view of the inapplicability of Sec. 4(6) in this case, the impact of Sec. 4(1) read with Sec. 7(3) and Rule 198(8) of the Kerala Co-operative Societies Rules is that non liability certificate will have to be issued within an outer time limit of 30 days from the date of retirement of the pensioner.

(d) In view of the above said provisions contained in Sec. 13 of the Payment of Gratuity Act, Sec. 10 of the EPF Act and Sec. 60(1) of the CPC, etc. the view rendered by the learned Single Judge in the judgment dated 18.3.2019 in W.P.(C).No. 3915/2018 to the extent it permits withholding of gratuity, PF, etc. until adjudication as per Sec.

69 of the KCS Act, does not reflect the correct legal position and the same will stand overruled.

(e) The larger issue as to the applicability or otherwise of the dictum laid down in the decisions as in Mahanadi Coalfields WA 297/20 - : 47 :-

Ltd.'s case supra [AIR 2020 SC 2978], FACT's case supra [2021 (2) KLT 899], etc. regarding the impact of Sec. 4(6) of the Payment of Gratuity Act, 1972, does not arise in the facts and circumstances of the present case and the said issue in regard to its applicability to employees covered by the Kerala Co-operative societies is left open to be raised and decided in appropriate cases in the manner known to law.

(f) In view of the abovesaid aspects, we are of the firm view that the impugned action of respondents 1 and 2 withholding the retiral benefits like gratuity, provident fund, is against the statutory provisions contained in the Kerala Co-operative Societies Act and the rules framed thereunder as well as the Payment of Gratuity Act, 1972 and since the said impugned action is in patent violation of the statutory provisions, writ jurisdiction is invokable in the facts and circumstances of the case, going by the dictum laid down by this Court in the decision in Association of Milma Officers v. State of Kerala [2015 (1) KLT 849 (LB)].

39. To sum up, the following orders and directions are passed:

(i) The impugned action on the part of respondents 1 and 2 in withholding the payment of gratuity amounts and balance provident fund amounts due to the appellant consequent to his retirement on WA 297/20 - : 48 :-

30.4.2015 by placing reliance on Ext.P-5 liability certificate in pursuance of Ext.R- 1(a) audit objections is illegal, ultra vires and unreasonable.

(ii) The plea of the appellant on the limitation issue is left open to be raised and decided at the time when respondents 1 and 2 initiate any proceedings as per the Kerala Co-operative Societies Act in terms of Sec.68 and Sec.69 of the Kerala Co-operative Societies Act

(iii) Respondents 1 and 2 will immediately disburse the full gratuity amount due to the petitioner and the balance provident fund due to him within an outer time limit of one month from the date of receipt of a copy of this judgment, along with interest thereon @ 8% per annum from 1.6.2015 upto the date of actual disbursal. If the abovesaid gratuity and provident fund amounts are not paid to the petitioner within the time limit of one month, then the said amount will carry interest @ 10% per annum .

(iv) With regard to the claims of the appellant for other benefits like leave surrender salary, welfare fund, security deposit, salary arrears, etc., the appellant is given liberty to raise claims by filing appropriate petition before the 3rd respondent Joint Registrar of co- operative societies and on filing of such petition, in which case, the 3rd respondent Joint Registrar, after affording reasonable opportunity of being heard to the appellant as well as respondents 1 and 2, will pass appropriate orders and directions thereon in accordance with law, within two months from the date of filing of such petition.

The abovesaid crucial and relevant aspects of the matter have not been duly taken into consideration in the rendering of the impugned judgment in this case. So the impugned judgment dt.

WA 297/20 - : 49 :-

21.1.2020 dismissing W.P.(C). No.24570/2019 will stand set aside.

With these observations and directions, the above Writ appeal (Civil) will stand finally disposed of.

Sd/-

ALEXANDER THOMAS, JUDGE Sd/-

                                     VIJU ABRAHAM, JUDGE

sdk+
 WA 297/20                 - : 50 :-

                 APPENDIX OF WA 297/2020

PETITIONER ANNEXURES
ANNEXURE A1   A TRUE COPY OF THE COMMUNICATION        DATED
              27.4.2015 RECEIVED BY THE APPELLANT     ALONG
              WITH RUNNING ACCOUNT OF THE AXIS BANK

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