Calcutta High Court
United Bank Of India vs Rana Mazumder & Ors on 22 December, 2017
Equivalent citations: AIRONLINE 2017 CAL 1, (2018) 1 CAL HN 210, (2018) 1 CAL LJ 481, (2018) 1 CALLT 141, (2018) 2 CURLR 133, (2019) 2 SCT 23
Author: Shekhar B. Saraf
Bench: Debasish Kar Gupta, Shekhar B. Saraf
IN THE HIGH COURT AT CALCUTTA
Civil Appellate Jurisdiction
Original Side
Present:
The Hon'ble Justice Debasish Kar Gupta
And
The Hon'ble Justice Shekhar B. Saraf
A.P.O. No.490 of 2017
G.A. No.3356 of 2017
With
W.P. No.379 of 2017
United Bank of India
Versus
Rana Mazumder & Ors.
For the appellant : Mr. Moloy Basu,
Ld. Senior Advocate,
Mr. R.N. Mazumder,
Ld. Senior Advocate,
Mr. Sourav Chakraborty,
Mr. Supratim Bhattacharjee
For the respondent : Mr. Arindam Moitra,
Mr. Soumya Mazumder,
Mr. Manik Ganguly
Heard on : 07/11/2017, 23/11/2017, 28/11/2017, 05/12/2017 & 07/12/2017
Judgment on: 22/12/2017
Shekhar B. Saraf, J. :
1. This is an application arising out of an appeal under clause 15 of the letters patent from the original order dated 18th July, 2017, passed in W.P. No. 379 of 2017 (Rana Mazumder -v- United Bank of India and Ors.) read with modification order dated 12th September, 2017, filed by the respondent bank in the original writ petition. The above writ application was disposed of directing the respondent bank to release the entire sum lying to the credit of the petitioner on account of gratuity positively within two weeks from the date of communication of this order with interest at the rate of 10 per cent per annum, payable from the date after the expiry of 30 days from the date of superannuation of the petitioner which has been notionally decided by the bank.
2. The facts giving rise to this application are as follows:
(i) The appellant is a nationalised bank constituted under the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970.
(ii) During the tenure of service as Chairman of Bangiya Gramin Vikash Bank (BGVB) from 20th April, 2010 to 3rd November, 2012, the respondent had allegedly committed various irregular acts and thereby failed to take all possible steps to ensure and protect the interest of the appellant bank, allegedly failed to discharge his duties with utmost integrity, honesty, devotion and diligence and accordingly acted in contravention of Regulation 3(1) and 3(3) of United Bank of India Officer Employees' (Conduct) Regulations 1976 (hereinafter referred to as 'said Regulations') constituting misconduct in terms of Regulation 24 of the said Regulations.
(iii) Accordingly, the Executive Director and Disciplinary Authority, issued a charge sheet bearing No. PD/DIR/BGVB/ 2613/5896/2014 dated 26th March, 2014, containing 21 charges against the respondent. Subsequently on 4th August, 2014 the Executive Director and Disciplinary Authority issued certain additional charges containing four articles of charge. The respondent submitted his defence to the charges and thereafter the enquiry officer completed the said enquiry on 1st December, 2015. The said enquiry report was forwarded to the respondent on 15th December, 2015. The respondent submitted his written submissions to the enquiry officer's report on 6th February, 2016.
(iv) The Executive Director and Disciplinary Authority vide his order bearing reference no. PD/DIR/2613/752/2016 dated 7th May, 2016 passed the final order, the operative portion is delineated below:
"After considering the facts and circumstances in the matter and gravity of the proved misconduct and after considering your submission and also after applying my mind independently, I hereby impose upon you the Major Penalty of "Removal from Service which will not be a disqualification for future employment" in terms of Regulation 4(i) of United Bank of India Officer Employees' (Discipline & Appeal) Regulations, 1976, with immediate effect, would be just and proper and commensurate with the irregularities committed by you.
Please note, save and except what has already been paid to you as your own contribution to Provident Fund and provisional pension till date of issuance of this order, you will not be entitled to any other terminal benefit as enumerated below:
1. Pension / Commutation of Pension in terms of Regulation 22, read with Regulation 46 of United Bank of India (Employees') Pension Regulation, 1995.
2. Gratuity in terms of Regulation 46(i)(e) of United Bank of India Officers' Service Regulations, 1979.
3. Encashment of accrued leave as on notional date of superannuation in terms of Regulation 38 of United Bank of India Officers' Service Regulations, 1979. This apart, it shall be open for the Bank to recover the aforementioned financial loss from you in accordance with law."
(v) The respondent preferred an appeal against the above order dated 7th May, 2016 before the statutory appellate authority on 10th June, 2016.
(vi) During the pendency of the above appeal before the statutory appellate authority a writ petition was filed by the respondent seeking a direction upon the appellant bank to release the gratuity and the leave encashment in favour of the petitioner, amongst other prayers. The Learned Single Judge by an order dated 7th December, 2016, disposed of the said writ petition with the following directions:
"(a) That the Managing Director and Appellate Authority of qua the petitioner of UBI, being the respondent no. 2 to this writ petition, shall decide the appeal of the petitioner appearing at pages 30 to 92 of the writ petition expeditiously in accordance with law and preferably not later than a period of twelve weeks from the date of communication of this order. The reasoned decision of the Appellate Authority shall reach the petitioner and the Appellate Authority shall be entitled to, as necessary, issue consequential orders based on such reasoned decision;
(b) The appropriate authority of the bank shall consider the prayer of the writ petitioner for leave encashment in the light of Regulation 38 of the 1976 Regulations as interpreted by the circular of the bank dated 21st July, 2015 appearing at page 100 of the writ petition.
Such exercise shall be completed by the authority of the bank within a period of four weeks from the date of communication of this order."
(vii) Thereafter, the aforesaid statutory appeal was rejected by an order dated 19th January, 2017. Assailing the entire disciplinary proceedings, orders passed by the authority and the forfeiture of the gratuity in terms of Regulation 46(i)(e) of the said Regulations, the respondent filed the writ application being W.P. No. 379 of 2017.
(viii) After hearing the parties, the Learned Single Judge passed the impugned order dated 18th July, 2017, giving directions for filing of affidavits. The Learned Single Judge further passed an interim order directing the appellant to immediately release the gratuity within two weeks from the date of communication of the order. The operative portion of the order is provided below:
"This is a case which calls for treating it as an exception to the generally held view of not passing a mandatory order at the very early stage. The petitioner had retired in the year 2014. In three years' time he had not been favoured with any retrial benefit except his own share of Provident Fund contribution. The respondents are not releasing his pension in view of the fact that he is not entitled to pension under the relevant law. This is a case where justice demands that for the sustenance of the petitioner, who had retired from the post of Deputy General Manager of the Bank, the bank should be directed to release the gratuity in favour of the petitioner within a period two weeks from the date of communicating this order. I have considered this case to be coming under one of the recognised exceptions to the general injunction in passing an order of mandatory injunction at the initial stage. In such view of it I direct the respondent bank to release the entire sum lying to the credit of the petitioner on account of gratuity positively within two weeks from the date of communication of this order with interest at the rate of 10 per cent per annum, payable from the date after the expiry of 30 days from the date of superannuation of the petitioner which has been notionally decided by the bank.
With the above observation the writ petition is disposed of. There shall be no order as to costs."
3. Mr. Moloy Kr. Basu, Senior Advocate appearing on behalf of the appellant bank submitted that the Learned Single Judge has proceeded on a wrong notion that the disciplinary authority in the final order had failed to quantify any amount suffered by the appellant bank on account of the alleged acts on the part of the respondent. He further submitted that the legal finding of the Learned Single Judge that the issue of the right of the appellant bank to forfeit the gratuity of a delinquent employee is no longer res- integra and the same has been settled by various judicial pronouncements is contrary to law.
4. Mr. Moloy Kr. Basu submitted that apart from the Regulation 46(1)(e) of the said Regulations, Section 4(6) of the Payment of Gratuity Act, 1972 also makes a similar provision for forfeiture of the gratuity of an employee when services have been terminated by any act of wilful negligence or causing any loss or destruction of a property belonging to the employer to the extent of the loss and damage caused. He submitted that the Learned Single Judge erred in law by passing a mandatory injunction directing the appellant bank to pay the gratuity to the delinquent employee at the interim stage, and by doing so, has already decided on one of the main prayers in the writ petition. The above order directing payment of gratuity to the employee when directions for affidavits have been given in the writ petition and the fact that the writ petition is still to be heard is against the principles established by law and the law laid down by the Supreme Court in various judicial pronouncements in relation to issue of interim mandatory injunctions. He relied upon a judgment of the Supreme Court in Dorab Cawasji Warden -v- Coomi Sorab Warden reported in AIR 1990 S.C. 867.
5. Mr. Majumder appearing on behalf of the respondent submitted that the Learned Trial Judge had come to a conclusion that gratuity becomes payable immediately upon superannuation and the same cannot be withheld on any account whatsoever except on the specific grounds in Section 4(6) of the Payment of Gratuity Act, 1972. He placed reliance on two judgments passed by the Division Bench of this High Court as follows:
"(i) M.A.T. 1298 of 2012 with C.A.N 7976 of 2012 (UCO Bank & Ors.
-v- Nityananda Paul & Anr.)
(ii) F.M.A No. 2129 of 2016 with C.A.N 9017 of 2017 (Oriental Bank of Commerce -v- The Deputy Chief Labour Commissioner (Central), Kolkata & Ors."
1. Mr. Majumder relied on the above two judgments to buttress his argument that as the writ petitioner had superannuated before the date of passing of the final order, there was no way in which the payment of gratuity could be forfeited by the appellant bank. He further submitted that as the order passed on 7th May, 2016 used the term "with immediate effect", the same was prospective in nature and would have no impact on the respondent as the respondent had retired in the year 2014 itself. He submitted that upon his retirement he had become eligible to obtain the gratuity within a period of 30 days from the date of his retirement and withholding of the same was legally untenable. He further submitted that as the final order was passed subsequent to his retirement, the same being prospective, the action of the appellant bank was in violation of the judgments passed by the Division Bench as mentioned above.
2. Mr. Majumder also submitted that as no exemption had been sought for by the appellant bank under the provisions of Section 5 of the Payment of Gratuity Act, 1972 to make the provisions of the said Regulations applicable with regard to the payment of gratuity, the action of the appellant bank in forfeiting the gratuity is unsustainable.
3. With regard to the issue of passing the interim mandatory injunction, Mr. Majumder submitted that the Learned Trial Judge had considered various judgments and had come to a conclusion that the payment of gratuity could not have been withheld under any circumstances by the appellant bank and therefore, a prima facie case having been made out by the writ petitioner, an order of mandatory injunction was necessary, as justice demanded that the writ petitioner who had retired in the year 2014 had not been favoured with any retirement benefits except his own share of provident fund contribution.
4. Mr. Majumder relied on paragraph 15 of the Supreme Court judgment in Dorab Cawasji Warden (Supra) submitting that being essentially an equitable relief, the grant or refusal of an interlocutory mandatory injunction shall ultimately rest in the sound judicial discretion of the court to be exercised in the light of the facts and circumstances in each case.
5. Having heard counsels appearing on behalf of both the parties, the first issue that comes up for determination is as to whether the appellant bank had quantified the loss that may have resulted from the actions of the respondent. On examination of the charge sheet dated 26th March, 2014 it is clear from the penultimate paragraph that the appellant bank had quantified an amount of Rs. 2396.71 lakhs as the estimated loss to the appellant bank. Secondly, the final order passed by the Executive Director and Disciplinary Authority dated 7th May, 2016 stated that the loan accounts in the original charge sheet appearing from serial no. 1 to 19 became Non Performing Assets (NPA) and the aggregate outstanding balance of those NPA accounts came to Rs. 2396.71 lakhs, due to the irregular acts of the writ petitioner and accordingly the appellant bank had been exposed to sustain financial loss to that extent plus applicable interest.
6. With reference to the charges under the addendum charge sheet, the final order stated that the bank had suffered a financial loss of Rs. 23,42,415/- on account of waiver as the bank had to compromise and settle for a lesser payment. After examining the enquiry report, the Executive Director and Disciplinary Authority came to a final conclusion as below:
"In the aforesaid context, there is no doubt that you had committed irregularities and the Bank has been exposed to a financial loss as stated in the aforesaid letter of charge dt. 26.03.2014 & addendum thereto dt. 04.08.2014. Out of the 21 charges of the initial charge sheet, I consider as under:-
(i)Charge Nos. 19 & 21 as 'Not proved',
(ii)Charge Nos. 4, 6, 9, 12, 16, 17, 18 & 20 as 'Proved',
(iii)Charge Nos. 1, 2, 3, 5, 7, 8, 10, 11, 13, 14, & 15 as 'Partially proved' as the sub charges regarding non-obtaining Opinion sheet in IBA prescribed format, non-compliance of KYC norms, could not be substantiated in the enquiry, and
(iv)All four charges of addendum charge sheet are 'Proved'."
7. In the order of the appellate authority at page 5 also, the appellate authority stated as follows:
"The charges levelled against the appellant are seen duly proved in the enquiry and the lapses established during the course of departmental enquiry contribute to an aggregate loss of Rs. 23.96 Crores plus applicable interest therein."
8. In view of the above findings in the final order and the order passed by the statutory appellate authority, it is clear that the loss suffered by the appellate bank was quantified and the finding of the Learned Single Judge that in the final order passed by the Disciplinary Authority the bank had not specifically quantified any amount suffered by the appellant bank on account of any alleged act on the part of the petitioner, seems to be an incorrect and perverse finding. The Learned Single Judge has proceeded in granting the mandatory injunction for release of gratuity to the writ petitioner based upon the above incorrect finding.
9. In the case of UCO Bank and Ors. -v- Nityanand Paul and another (Supra), relied upon by the respondent, the Division Bench had come to a finding that neither at the time of issue of show cause notice to the employee nor on submission of the enquiry report, the bank had mentioned any loss caused to the bank.
10. In the case of Oriental Bank of Commerce, The Deputy Chief Labour Commissioner (Central), Calcutta and Ors. (Supra), the factual matrix was that there was a judicial proceeding pending before a criminal court subsequent to the retirement of the employee and the bank was desirous of withholding the gratuity payment till the conclusion of the criminal proceedings.
11. In both these cases, the Learned Trial Judge had passed orders for payment of gratuity at the final stage and not at an interim stage. Furthermore, the above two cases do not come to the assistance of Mr. Majumder as the facts in the instant case are that an order of forfeiture of gratuity has already been passed and the charge sheet, the enquiry report, the final order and the appellate authority's orders all state and quantify the amount of loss caused to the appellant bank due to the irregular, illegal actions of the delinquent employee.
12. It is true that the final order imposing the punishment of forfeiture was passed subsequent to the superannuation of the delinquent employee, the disciplinary enquiry having been commenced before the said superannuation. The challenge in the writ petition was against such final order and the appellate authority order in relation to the terminal benefits including forfeiture of the gratuity.
13. It may be noted that the Supreme Court in the case of Chairman-
Cum-Managing Director Mahanadi Coalfield Limited -v- Rabindranath Choubey, reported in (2013) 16 SCC 411, has delved into the very issue with regard to whether gratuity could be withheld by the employer even after superannuation of an employee where departmental proceedings were pending at the time of superannuation. The Supreme Court on consideration of two divergent views of the Supreme Court in the matters of Jaswant Singh Gill -v- Bharat Coking Coal Ltd., reported in (2007) 1 SCC 663 and SBI -v- Ram Lal Bhaskar, reported in (2011) 10 SCC 249, referred the matter to a Larger Bench of three Judges. The relevant paragraphs are delineated below:
"22. The issue which confronts us in the instant appeal is as to whether gratuity can be withheld in the wake of Rule 34 of the CDA Rules when examined in justaposition with the provisions of the Gratuity Act. To put it otherwise, whether in the scheme of the Gratuity Act, gratuity has to be necessarily released to the employee concerned on his retirement even if departmental proceedings are pending against him. We find that Jaswant Singh Gill case directly answers this question, that too in the context of these very CDA Rules. However, it is because of the reason that the said judgment proceeds on the basis that after the retirement of an employee, penalty of dismissal cannot be imposed upon the retired employee. If this view is not correct and the imposition of penalty of dismissal is still permissible, the employer will get the right to forfeit the gratuity of such an employee in the eventualities provided under Sections 4(1) and 4(6) of the Payment of Gratuity Act which read as under:
"4.Payment of gratuity.-(1) 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-
(a) On his superannuation, or
(b) On his retirement or resignation, or
(c) On his death or disablement due to accident or disease:
Provided that the 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:
Provided further that in the case of death of the employee, gratuity payable to him shall be paid to his nominee or, if no nomination has been made, to his heirs, and where any such nominees or heirs is a minor, the share of such minor, shall be deposited with the controlling authority who shall invest the same for the benefit of such minor in such bank or other financial institution, as may be prescribed, until such minor attains majority.
Explanation.- For the purposes of this section, disablement means such disablement as incapacitates an employee for the work which he was capable of performing before the accident or disease resulting in such disablement.
(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."
Thus for invoking clause (a) or (b) of sub-section 6 of Section 4, the necessary precondition is the termination of service on the basis of departmental enquiry or conviction in a criminal case. This provision would not get triggered if there is no termination of services.
23. It is the case of the appellant that in the charge-sheet served upon the respondent herein, there are very serious allegations of misconduct alleging dishonesty causing coal stock shortage amounting to Rs. 31.65 crores, and thereby causing substantial loss to the employer. If such a charge is proved and punishment of dismissal is given thereupon, the provisions of Section 4(6) of the Payment of Gratuity Act would naturally get attracted and it would be within the discretion of the appellant to forfeit the gratuity payable to the respondent. As a corollary one can safely say that the employer has right to withhold the gratuity pending departmental inquiry. However, as explained above, this course of action is available only if disciplinary authority has necessary powers to impose the penalty of dismissal upon the respondent even after his retirement. Having regard to our discussion above of Jaswant Singh Gill and Ram Lal Bhaskar, this issue needs to be considered authoritatively by a larger Bench. We, therefore, are of the opinion that the present appeal be decided by a Bench of three judges."
14. In view of the Supreme Court judgment in Mahanadi Coalfield Ltd.
-v- Rabindranath Choubey (Supra) it is clear that the issue with regard to forfeiture of gratuity after the superannuation of the delinquent employee has been referred to a larger Bench of the Supreme Court and accordingly the above issue is very much res- integra.
15. The challenge before us in this appeal is specifically with the mandatory injunction directing the respondent bank to release the entire sum on account of gratuity. We find force in the submissions made by Mr. Basu, learned Senior Advocate appearing for the appellants that the principles in relation to issue of such a mandatory injunction have been succinctly discussed in the Supreme Court judgment of Dorab Cawasji Warden (Supra) and the relevant portion of the above judgment is quoted below:-
"14. The relief of interlocutory mandatory injunctions are thus granted generally to preserve or restore the status quo of the last non- contested status which preceded the pending controversy until the final hearing when full relief may be granted or to compel the undoing of those acts that have been illegally done or the restoration of that which was wrongfully taken from the party complaining. But since the granting of such an injunction to a party who fails or would fail to establish his right at the trial may cause great injustice or irreparable harm to the party against whom it was granted or alternatively not granting of it to a party who succeeds or would succeed may equally cause great injustice or irreparable harm, courts have evolved certain guidelines. Generally stated these guidelines are :
(1) The plaintiff has a strong case for trial. That is, it shall be of a higher standard than a prima facie case that is normally required for a prohibitory injunction.
(2) It is necessary to prevent irreparable or serious injury which normally cannot be compensated in terms of money.
(3) The balance of convenience is in favour of the one seeking such relief.
15. Being essentially an equitable relief the grant or refusal of an interlocutory mandatory injunction shall ultimately rest in the sound judicial discretion of the Court to be exercised in the light of the facts and circumstances in each case. Though the above guidelines are neither exhaustive or complete or absolute rules, and there may be exceptional circumstances needing action, applying them as pre-requisite for the grant or refusal of such injunctions would be a sound exercise of a judicial discretion."
16. We are unable to agree with the Learned Single Judge that the issue in relation to forfeiture of gratuity has been settled, and, is no longer res integra as the same has been referred to a larger Bench of the Supreme Court as indicated above. Further, the issue whether the exception u/s 4(6) would apply and the gratuity may be forfeited has to be examined in the facts of each case. Different facts situations would result in different conclusions and it could not be stated that in all cases gratuity has to be paid immediately upon superannuation of the delinquent employee. In the present case, as the loss had been quantified by the appellant bank in the show cause notice and in the final order, Section 4(6) of the Payment of Gratuity Act comes into play. In our view, the respondent had failed to make out a prima facie case for a mandatory injunction at the interim stage.
17. Secondly, the writ petition did not disclose the irreparable loss or serious injury that could have been caused to the respondent that could not have been compensated in terms of money.
23. Thirdly, the balance of convenience and the balance of inconvenience necessarily have to be in favour of the person seeking the relief - in the present case that does not seem to be the case as the respondent would have gained undue advantage by having received the gratuity amount without having succeeded in the writ petition. In the event, the appellant bank succeeded in the writ petition, irreparable loss would have been caused to them as they would have been out of pocket with regard to the gratuity amount paid as per the interim order.
24. In the light of the above, the portion of the impugned order dated 18th July, 2017, in so far as it relates to grant of a mandatory injunction order at the interim stage, is set aside with a request to the Learned Single Judge to expeditiously hear out the writ petition. All points which are involved in the writ application are kept open for final adjudication in the writ application.
25. Since no purpose shall be achieved by keeping the appeal pending, the appeal is also treated as on the day's list, that is, 7th December, 2017 and is accordingly disposed off.
26. No order as to costs.
I agree.
(Debasish Kar Gupta, J.) (Shekhar B. Saraf, J.)