Himachal Pradesh High Court
Arun Kumar Sood vs Chairman & Managing Director on 5 September, 2019
Bench: Dharam Chand Chaudhary, Jyotsna Rewal Dua
IN THE HIGH COURT OF HIMACHAL PRADESH, SHIMLA LPA No.128 of 2011 with LPA No.353 of 2011 Reserved on: 07.08.2019 .
Decided on: 5.9.2019 Arun Kumar Sood ....Appellant/Petitioner.
Versus Chairman & Managing Director, UCO Bank & Ors.
...... Respondents.
......................................................................................................... Coram The Hon'ble Mr. Justice Dharam Chand Chaudhary, (J) The Hon'ble Ms. Justice Jyotsna Rewal Dua, (J).
Whether approved for reporting?1 yes
LPA No.128 of 2011
For the appellant: Mr. Ajay Sharma, Senior Advocate,
with Mr. Ajay Thakur, for the
appellant.
For the respondents: Mr. Shrawan Dogra, Senior
Advocate with Mr. Sanjay Dalmia &
Ms. Nishi Goel, Advocate for the
respondents.
LPA No.353 of 2011
For the appellants: Mr. Shrawan Dogra, Senior
Advocate with Mr. Sanjay Dalmia &
Ms. Nishi Goel, Advocate for the
appellants.
For the respondent: Mr. Ajay Sharma, Senior
Advocate, with Mr. Ajay Thakur.
Jyotsna Rewal Dua,(J)
This is second round of litigation between the parties.
Learned Single Judge though did not interfere with the decision 1 Whether reporters of the local papers may be allowed to see the judgment?
::: Downloaded on - 29/09/2019 03:10:51 :::HCHP 2of the respondents-bank in granting 2/3rd of the pension to the petitioner, however directed the respondents-bank to release the .
gratuity to the petitioner. Aggrieved against this decision, petitioner has filed LPA No.128 of 2011, praying for grant of full pension and as well as for interest over withheld gratuity.
Respondents-bank has filed its own LPA No.353 of 2011, against the directions issued to it in respect of releasing withheld gratuity in favour of the petitioner. Subsequent to the judgment, impugned in the present appeals, gratuity has been released to the petitioner.
For sake of convenience, parties are referred to hereinafter, as they were in writ records.
2. The factual position common to both the appeals:
CWP No.438 of 1994:
2(i) While serving as manager with the respondents-
bank, disciplinary proceedings were initiated against the petitioner for imposition of major penalty. After the conclusion of the proceedings, penalty of removal from respondents-bank's services was imposed on the petitioner vide order dated
3.11.1993. Appeal against the imposition of penalty was turned down by the appellate authority.
::: Downloaded on - 29/09/2019 03:10:51 :::HCHP 32(ii) Petitioner preferred CWP No.438 of 1994. The writ petition was decided on 17.12.1998, in following manner:-
.
"13. In view of these guidelines it is true that in all disciplinary matters the punishment has to be moderated having regard to the nature of the charge proved, the total length of service and past record of the delinquent in the department. Once the charge is proved and if it is a charge which can validly attract a punishment provided by law, the quantum of punishment awarded by the Disciplinary Authority is not justifiable and it is not open to this Court in its extraordinary jurisdiction to substitute its own notion of what the punishment should be, except perhaps in a case where it is so patently harsh as to shock its sense of justice and reasonableness. In view of these guidelines, though the punishment of termination from bank service is not shockingly harsh in view of the nature of the misconduct proved against the petitioner, who is holding a responsible post of Manager in a nationalized bank, yet in the totality of facts and circumstances on record, more specifically, that the petitioner has faced, firstly, criminal charge and thereafter the departmental proceedings for the last about 10 years and has put in service of 28 years, the ends of justice will be duly served if the order of termination is converted into compulsory retirement with immediate effect in view of the fact that he continues to be in service as a result of stay of the order of termination by this Court. The writ petition is disposed of in these terms. There is no order as to costs."
2(iii) Though in the above extracted judgment, the findings of disciplinary authority/appellate authority were not interfered with, however, the punishment of termination from bank's service was substituted and converted into compulsory retirement with immediate effect. This judgment having been accepted by all the parties, has attained finality.
2(iv) In the process to implement the judgment, the petitioner was compulsorily retired by the respondents-bank on 19.03.1999. Gratuity was declined to the petitioner by the respondents-bank vide Annexure/P-1 dated 9.12.1999.
::: Downloaded on - 29/09/2019 03:10:51 :::HCHP 4On 15.03.2000, (Annexure/R-1), competent authority of the respondents-bank took a decision under Regulation No.33 .
of the UCO Bank (Employees') Pension Regulations, 1995, for awarding compulsory retirement pension to the petitioner to the extent of 2/3rd of his pension. This decision was approved by a separate resolution of Board of Directors of the respondents-
bank on 15.03.2000 itself.
Resultantly, subsequent to the judgment passed in CWP No.438 of 1994, the petitioner was compulsory retired w.e.f.
19.3.1999 and was released 2/3 rd of the pension, but gratuity was declined to him.
2(v). Writ petition leading to filing of present appeals:
2(v) Feeling aggrieved against the decision of the respondents-bank withholding his gratuity as well as not releasing his full pension, petitioner filed civil writ petition No.133 of 2001.
2(vi). Stand of the respondents-bank to the writ petition was:- action of withholding petitioner's gratuity is in accordance with Section 4(6)(b) of the Payment of Gratuity Act, 1972;
respondents-bank also justified it's action of paying only 2/3 rd pension to the petitioner on the basis of Regulation No.33 of the UCO Bank (Employees') Pension Regulations, 1995.::: Downloaded on - 29/09/2019 03:10:51 :::HCHP 5
2(vii) Learned Single Judge vide impugned judgment dated 21.10.2010, partly allowed the writ petition and directed the .
respondents-bank to release withheld gratuity to the petitioner in accordance with the services regulations. Decision of the respondents-bank in paying only 2/3 rd pension to the petitioner was not interfered with. Feeling aggrieved against the judgment, instant appeals have been preferred.
3. Following aspects are being considered by us hereinafter:-
(i) Release of pension.
(ii) Release of gratuity.
(iii) Interest over payable gratuity.
4. Release of pension (2/3rd or full):
4(i) Release of compulsory retirement pension to the
employees of the respondents-bank is governed by Regulation No.33 of the UCO Bank (Employees') Pension Regulations, 1995, which is reproduced hereinafter:-
"33. Compulsory Retirement Pension-(1) An employee compulsorily retired from service as a penalty on or after 1 st day of November, 1993 in terms of UCO Bank Officer Employees' (Discipline and Appeal) Regulations, 1976 or awards/settlements may be granted by the authority higher than the authority competent to impose such penalty, pension at a rate not less than two-thirds and not more than full pension admissible to him on the date of his compulsory retirement if otherwise he was entitled to such pension on superannuation on that date.
(2) whenever in the case of a bank employee the competent authority passes an order (whether original, appellate or in exercise of power of review) awarding a pension less than the full compensation pension admissible under these regulations, the Board of Directors shall be consulted before such order is passed.::: Downloaded on - 29/09/2019 03:10:51 :::HCHP 6
(3) A pension granted or awarded under sub-regulation (1) or, as the case may be, under sub-regulation (2), shall not be less than the amount of rupees three hundred and seventy five per mensem."
.
4(ii)a) The contention of Mr. Ajay Sharma, learned senior counsel for the petitioner is that though bank has discretion in terms of Regulation No.33 of the UCO Bank (Employees') Pension Regulations, 1995, to grant between 2/3 rd to full pension, to it's employee, who has been compulsorily retired, but any decision of the competent authority for awarding less than full pension has to be taken only in consultation with the Board of Directors. Learned senior counsel, further contended that petitioner is also required to be heard before passing the order in this regard.
In nutshell, the contention of learned senior counsel for the petitioner is that Regulation No.33 (1) and (2) are to be read conjointly. His further submission is that in the instant case, the decision to grant 2/3 rd pension to the petitioner had been taken by the competent authority without consultation with the Board of Directors and without giving an opportunity of hearing to the petitioner, therefore, the decision is not valid and is required to be quashed and set aside.
In support of his submissions, learned senior counsel for the appellant relied upon the judgment dated 5.7.2006, ::: Downloaded on - 29/09/2019 03:10:51 :::HCHP 7 passed by learned Single Judge of Punjab and Haryana High Court, in CWP No.2302 of 2002, which has been upheld in LPA .
No.191 of 2006 vide judgment dated 1.2.2010, titled UCO Bank and others vs. Ashwani Kumar Sharma.
4(ii)b) Per contra, Mr. Sharwan Dogra, learned senior counsel for the respondents-bank, argued that Regulation 33(1) is separate and distinct from Regulation 33(2). Regulation 33(1) pertains to a situation where compulsory retirement is the result of a penalty. Whereas, Regulation 33(2), operates in cases of compulsory retirement simplicitor. Therefore, according to learned senior counsel for respondents-bank, consultation with Board of Directors provided in Regulation 33(2) is not required in the facts of instant case, where penalty of compulsory retirement has been imposed upon the petitioner. Learned senior counsel also contended that no opportunity of hearing is required to be given to the petitioner, whose penalty of removal from service was converted into compulsory retirement, pursuant to the judgment passed in CWP No.438 of 1994.
4(iii) A careful perusal of Regulation No.33(1), makes it clear that it covers a situation where employee has been compulsory retired by way of imposition of penalty. In such cases, pension has to be fixed not less than 2/3 rd and cannot be more than full pension otherwise admissible to an employee on ::: Downloaded on - 29/09/2019 03:10:51 :::HCHP 8 such date. Regulation No.33(2) mandates that before passing an order of awarding less than full pension, competent authority .
shall consult the Board of Directors. Regulations No.33(1) and 33(2) are to be read conjointly, as these pertain to a situation where employee is compulsory retired by way of punishment. It is settled law that compulsory retirement can either be simplicitor or by way of punishment, see (2001) 2 SCC 305, titled Bishwanath Prasad Singh Vs. State of Bihar and others. Regulation 33 will have no applicability in cases of compulsory retirement simplicitor as no amount of pension can be withheld in cases of compulsory retirement simplicitor.
Argument of learned senior counsel for the respondents-bank for reading Regulations No.33(1) and 33(2) separately does not hold good.
We find from the record that in the instant case, memorandum dated 15.3.2000 (Annexure-R-1) was prepared by the competent authority of the respondents-bank for granting compulsory retirement pension to the petitioner to the extent of 2/3rd of his pension. This decision was also approved by Board of Directors vide a separate resolution on 15.03.2000. Thus, the argument of learned senior counsel for the petitioner regarding ::: Downloaded on - 29/09/2019 03:10:51 :::HCHP 9 Board of Directors having not been consulted before granting 2/3rd pension to the petitioner, is de-hors the factual position.
.
4(iv) However the issue of consultation with Board of Directors will not be of much significance in view of failure on the part of respondents-bank to comply with principles of natural justice before forfeiting 1/3rd pension of petitioner.
a) Regulation 33, of UCO Bank Employees Regulation 1995, does not contain any express provision for giving an opportunity of hearing to the employee or compliance with the principles of natural justice in any form, before passing order in respect of determination of pension of an employee compulsory retired by way of punishment. All this provision envisages, is that such an employee can have pension, which will not be less than 2/3rd and not more than full pension admissible to him, subject to approval of such decision by Board of Directors.
b) Learned Single Bench of Punjab and Haryana High Court in CWP No.2302 of 2002, titled Ashwani Kumar Sharma Vs. UCO Bank and others, held that principles of natural justice are required to be read into Regulation 33, even if they are not expressly provided therein, for forfeiting 1/3 rd of an employee's pension, retired compulsorily by way of punishment.
Action of UCO-bank (respondent therein) in forfeiting 1/3 rd of ::: Downloaded on - 29/09/2019 03:10:51 :::HCHP 10 the pension and paying only 2/3 rd of the pension to the petitioner therein (compulsorily retired employee) was held to .
be in violation of principles of natural justice. The directions in this judgment in respect of setting aside the order of the bank in forfeiting 1/3rd of the pension and giving liberty to the bank to pass fresh order for determining the pension to be paid to such employee after serving notice upon him and providing an opportunity of hearing, had been accepted by the UCO-bank.
This direction in the judgment of learned Single Judge, was not challenged by UCO-bank before the Division Bench.
c) Petitioner in the instant case has been inflicted punishment of compulsory retirement under the Disciplinary Regulations of the bank. Determination of compulsory retirement pension payable to him, in terms of Regulation No.33 of the UCO Bank (Employees') Pension Regulations, 1995, would definitely entail civil consequences. This regulation though gives the discretion to the competent authority of respondents-bank to determine pension between 2/3rd to full pension admissible to an employee with approval of Board of Directors, however, this does not mean that pension can never be determined above the minimum prescribed 2/3rd pension. What should be the payable pension, will depend upon facts and circumstances of each individual case, which are required to be considered by the ::: Downloaded on - 29/09/2019 03:10:51 :::HCHP 11 competent authority, after giving show cause notice and providing an opportunity of hearing to the affected employee.
.
The financial loss caused to the bank would also be a relevant factor in this regard. Regulation No.33, may not expressly enshrine principles of natural justice, however, the discretion to determine compulsory retirement pension even under Regulation No.33, cannot be exercised whimsically. It has to be exercised judiciously. The Hon'ble Apex Court in (2004) 2 SCC 447, titled Mangilal vs. State of M.P., has held that even if there are no positive words in the Act or Rules made thereunder, still principles of natural justice must be read in them unless there is clear mandate to the contrary. There is no contrary provision existing under Regulation 33, for denying the applicability of principles of natural justice.
It would be apt to refer the relevant para of the afore judgment, as under:-
"10. Even if a statute is silent and there are no positive words in the Act or Rules made thereunder there could be nothing wrong in spelling out the need to hear the parties whose rights and interest are likely to be affected, by the orders that may be passed, and making it a requirement to follow a fair procedure before taking a decision, unless the statute provides otherwise. The principles of natural justice must be read into unoccupied interstices of the statute, unless there is clear mandate to the contrary. No form or procedure should ever be permitted to exclude the presentation of a litigant's defence or stand. Even in the absence of a provision in procedural laws, power inheres in every Tribunal/Court of a judicial or quasi-judicial character, to adopt modalities necessary to achieve requirements of natural justice and fair play to ensure better and proper discharge of their duties.::: Downloaded on - 29/09/2019 03:10:51 :::HCHP 12
Procedure is mainly grounded on principles of natural justice irrespective of the extent of its application by express provision in that regard in given situation. It has always been a cherished principle. Where the statute is silent about the observance of the principles of natural justice, such statutory .
silence is taken to imply compliance with the principles of natural justice where substantial rights of parties are considerably affected. The application of natural justice becomes presumptive, unless found excluded by express words of statute or necessary intendment. (See Swadesi Cotton Mills etc. etc. v. Union of India etc. etc., AIR 1961 SC
818). Its aim is to secure justice or to prevent miscarriage of justice. Principles of natural justice do not supplant the law, but supplement it. These rules operate only in areas not covered by any law validly made. They are means to an end and not an end in themselves. The principles of natural justice have many facets. Two of them are: notice of the case to be met, and opportunity to explain.
Similar is the ratio in (2018) 7 SCC 670, titled Union of India and others Vs. Ram Lakhan Sharma & in (2015) 8 SCC 519, titled Dharampal Satyapal Limited Vs. Deputy Commissioner of Central Excise, Gauhati and others.
d) Petitioner has already been retired compulsorily under Disciplinary Regulations. Further forfeiture of 1/3 rd of his pension under pension regulations vests upon him, civil consequences. The forfeiture of any amount of pension has to be only in accordance with law and after following principles of natural justice. There cannot be a blanket order of forfeiture of 1/3rd of pension and grant of minimum prescribed 2/3 rd pension under Regulation No.33. Opportunity is required to be granted to the petitioner to present his case, only thereafter the discretion under Regulation No.33, can be exercised by the bank ::: Downloaded on - 29/09/2019 03:10:51 :::HCHP 13 in a judicious and fair manner considering all relevant factors. In the instant case, this procedure has not been followed. The .
respondents-bank have straightway forfeited 1/3 rd of petitioner's pension and allowed him 2/3 rd i.e. minimum prescribed pension under Regulation No.33. The action is in violation of principles of natural justice & thus cannot be sustained.
5. Withholding of gratuity:
5 (i) Release of gratuity to the employees of the respondents-bank, in terms of the reply filed by the bank in the writ petition, is governed by Payment of Gratuity Act, 1972.
Section 4(6)(b) of this Act, being relevant, is reproduced hereinafter:-
"(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".
Another relevant provision in this regard i.e. Rule 10 of UCO Bank Employees Gratuity Fund Rules, is extracted hereinafter:-
"10 (a) The gratuity of an employee to all employee shall be wholly forfeited if the services have been terminated on ::: Downloaded on - 29/09/2019 03:10:51 :::HCHP 14 account of any misconduct resulting in financial loss or damage to the Bank, shall be forfeited to the extent of the damage or loss so caused.
(b) The gratuity payable to an employee shall be wholly forfeited if the services of such employee have been .
terminated for any act which constitution of offence involving moral turpitude provided that, such offence is committed by him in the course of his employment."
Regulation No.46(1)(e) of Banks Officers Service Regulations pressed during arguments, is extracted hereinafter:-
"46.(1) Every officer, shall be eligible for gratuity on.
a) Retirement
b) Death
c) Disablement rendering him unfit for further service as
certified by a medical officer approved by the Bank.
d) Resignation after completing ten years of continuous service or
e) Termination of service in any other way except by way of punishment after completion of 10 years of service."
A reading of the section 4(6)(b)(ii) of Payment of Gratuity Act, makes it evident that gratuity payable to an employee can be forfeited either wholly or in part, in case his service has been terminated for any act committed during the course of employment, constituting an offence involving moral turpitude. To the similar effect is Rule 10(b) of UCO Bank Employees Gratuity Fund Rules.
5(ii) Here, it is to be noticed that initially, the penalty imposed on the petitioner was 'termination from service'.
However, decision dated 21.10.2010, rendered in CWP No.133 of 2001, converted the penalty of termination from service to the penalty of compulsory retirement.
::: Downloaded on - 29/09/2019 03:10:51 :::HCHP 155(iii) a) Learned senior counsel for the respondents-
bank relying upon Regulation 46(1)(e) of UCO Bank (officers) .
Service Regulations and Section 4(6)(b)(ii) of Payment of Gratuity Act, has argued that no gratuity is payable to the petitioner; rather, gratuity paid to the petitioner pursuant to the impugned judgment, is liable to be recovered from him.
5(iii) b) Learned senior counsel for the petitioner, relies upon judgment passed by learned Single Bench of Hon'ble Punjab and Haryana High Court, delivered on 5.7.2006 in CWP No.2302 of 2002, titled Ashwani Kumar Sharma Vs. UCO Bank, as upheld by the Division Bench in LPA No. 191 of 2006, vide decision dated 1.2.2010, whereby Hon'ble Court had directed the respondents-bank to release gratuity in favour of the petitioner. Learned Single Judge of Hon'ble Punjab and Haryana High Court in CWP No.2302 of 2002, had inter-alia observed that:- compulsory retirement cannot be read to mean 'termination'; from service as is understood by the word 'termination', 'Dismissal' and 'Removal' are two different forms of punishments leading to termination; But compulsory retirement cannot be equated with 'Dismissal or Removal' from the service; In case compulsory retirement is to be construed having the same meaning as is the meaning of dismissal and removal from service then there would be no difference ::: Downloaded on - 29/09/2019 03:10:51 :::HCHP 16 between penalty by way of compulsory retirement and penalty by way of dismissal/removal from the service; Hence, even if an .
employee is retired compulsorily may be by way of punishment, he is entitled to his full gratuity. Further principles of natural justice are also required to be complied with.
The judgment passed by learned Single Bench, was upheld by learned Divisional Bench in following manner:-
"8. A perusal of above shows that Clause(e) of Regulation 46 above which has been relied upon by learned counsel for the appellants cannot apply to the case of compulsory retirement. Similarly, first proviso to Regulation 38 clearly shows that on retirement, an officer is entitled to leave encashment. There is no provision for withholding gratuity and leave encashment in the case of compulsory retirement."
5(iv)a) However, the above extracted judgment has been held not to be a good law by the larger Bench of Hon'ble Punjab and Haryana High Court in LPA No.566 of 2012, decided on 7.3.2013, titled UCO Bank and others Vs. Anju Mathur. It was held therein that compulsory retirement by way of punishment also leads to termination of service & therefore gratuity in such cases can be withheld. Relevant paras from same are reproduced hereinafter:-
12. Two aspects arise for consideration, namely, - (a) whether gratuity can be withheld/forfeited under Regulation 46(1)(e) if the termination of service is by way of punishment of compulsory retirement; and (b) if it can be forfeited, then under what circumstances and whether it would be necessary to give proper hearing to the delinquent employee before forfeiting the gratuity.::: Downloaded on - 29/09/2019 03:10:51 :::HCHP 17
13. Regulation 46 of the Officers' Regulations makes every officer eligible for gratuity in certain circumstances which include retirement, death, disablement, resignation and termination. However, Clause(e) states that if the termination of service is occasioned by way of punishment, then the .
officer will not be entitled to gratuity. The Division Bench in Ashwani Kumar Sharma (supra) held that this clause cannot apply to the case of compulsory retirement. That is the only reason given, but without any elaboration. We are afraid, we cannot accept this to be a justified reason, as it leads to wrong interpretation of Clause (e) of Regulation 46 of the Officers' Regulations.
14. We would like to emphasise that compulsory retirement is of two types. There can be an administrative order retiring an employee compulsorily from service when the employer finds that the employee has become deadwood. However, the compulsory retirement is also provided as one of the modes of punishment in the Disciplinary and Appeal Regulations, 1976 framed by the Bank. Whenever compulsory retirement is effected by way of penalty which is imposed after holding a regular enquiry, then the compulsory retirement leads to termination by way of punishment. Termination of service can result by various modes. It amounts to cessation of employment whereupon the employer-employee relation comes to an end. The purport of Regulation 46(1)(e) is very clear. Whenever it is a case of termination by any other mode than by way of punishment, gratuity is payable, but not when termination is occasioned by way of penalty on account of misconduct committed by an employee established in the regular departmental enquiry against such delinquent employee.
15. We are, therefore, of the opinion that Regulation 46(1) of the Officers' Regulations would not apply when termination is occasioned by way of compulsory retirement by way of punishment on account of misconduct proved against such an employee after regular departmental enquiry. To that extent, the judgment of Division Bench in Ashwani Kumar Sharma (supra) does not lay down correct law and is hereby overruled.
This sub-section gives the instances when the gratuity can be forfeited and the forfeiture can be whole or partial. We are concerned herein with Clauses (a) and (d). The gratuity can be forfeited if there is damage loss suffered by the employer because of wilful omission or negligence of the employee which act led to his termination. In that case, the forfeiture has to be to the extent of damage or loss caused. The gratuity can also be forfeited if the misconduct by the delinquent employee constitutes an offence involving moral turpitude and when such an offence is committed by him in the course of his employment.
::: Downloaded on - 29/09/2019 03:10:51 :::HCHP 1825. At the outset, we are forced to remark that reasons given in Ashwani Kumar Sharma (supra) are not legally correct, as the compulsory retirement by way of punishment is also treated as ordinary termination of service on which we have already given our decision hereinabove"
.
5(iv)b) After holding that gratuity can be forfeited in case of compulsory retirement by way of punishment, as this would also amount to termination of service, the larger Bench thereafter, considered expression 'moral turpitude' occurring in Section 4(6)(b)(ii) of Payment of Gratuity Act and relied upon a judgment of Division Bench of Bombay High Court in Shri Ramchandra S. Joshi v. Bank of Baroda, (Writ Petition No.636 of 2002) decided on 5th April, 2010, which further relied upon a Division Bench of the Karnataka High Court in M/s.
Bharath Gold Mines Ltd., 1986 Lab.I.C. 1976 to the effect that 'Moral turpitude' is anything done contrary to justice, honesty, modesty or good morals and anything done contrary to justice, honesty, modesty or good morals involves moral turpitude.
Dishonesty is one of the essential ingredients of the offence of theft. If there is no dishonesty in removing or taking a property belonging to another, it constitutes no offence of theft.
Therefore, it is clear that when a person is found guilty of the charge of theft, it means, he has acted dishonestly and from this it follows that he has committed an offence involving moral turpitude.::: Downloaded on - 29/09/2019 03:10:51 :::HCHP 19
5(iv)c) The larger Bench then considered various decisions to the effect that before forfeiting entire gratuity, employer has .
to take an independent decision, as to whether gratuity deserves to be forfeited at all or not & the extent thereof; such a decision has to depend upon facts of each case; Penalty for recovery can also be actual loss occasioned by the mis-conduct of employee. Relevant paras of judgment in this regard, are reproduced hereinafter:-
"17. The Karnataka High Court in the case of M/s Bharath Gold Mines Ltd. v. The Regional Labour Commissioner (Central), Bangalore & Ors., reported in 1986 Lab.I.C. 1976 has held that before an employer takes steps to forfeit the entire gratuity, the employer has to take an independent decision after the termination of the service of an employee as to whether the gratuity payable should at all be forfeited and that decision must depend on the facts and circumstances of the case.
Likewise, Bombay High Court in the case of Smt.Kamla Rameshchandra Sharma v. Maharashtra Rajya Wakhar Mahamandal, Pune, reported in 2009 (121) FLR 87 (DB) took the view that the penalty for recovery from pay of the whole or part of the pecuniary loss caused to the Corporation must be the actual pecuniary loss occasioned, by the misconduct of the employee. In that case the learned Bench noted that the penalty imposed on the delinquent refers to future events, which may or may not result in causing of loss to the Corporation and in that case the loss had not been quantified.
18................................
11). In the case of The Management of Tournamulla Estate v/s Workmen, AIR 1973 SC 2344, before the enactment of the Gratuity Act, the Supreme Court noted that in Delhi Cloth & General Mills Co.
Ltd. v/s Workmen, AIR 1970 SC 919, noted the object of having a gratuity scheme which is to provide a retiring benefit to workmen who have rendered long and unblemished service to the employer and thereby contributed to the prosperity of the employer, and therefore, it was not correct to say that no misconduct, however grave, may not be visited with forfeiture of gratuity. Various kind of misconducts were thereafter noted, which were (1) technical misconduct which leaves no trail of indiscipline, (2) misconduct resulting in damage to the employer's property which might be compensated by forfeiture of gratuity or part thereof, and (3) serious misconduct such as acts of ::: Downloaded on - 29/09/2019 03:10:51 :::HCHP 20 violence against the management or other employees or riotous or disorderly behaviour in or near the place of employment, which, though not directly causing damage, is conducive to grave indiscipline. The Court observed that the first should involve no forfeiture, the second may involve forfeiture of the amount equal to the loss directly .
suffered by the employer in consequences of the misconduct and the third will entail forfeiture of gratuity due to the workman. Thus, it would be clear that even before the Gratuity Act has come into force, the Supreme Court had noted that gratuity could be forfeited. Object of paying gratuity has been sufficiently set out in the judgment of the Supreme Court in the case of U. P. State Sugar Corporation Ltd. & Ors. v Kamal Swaroop Tondon, 2008 II CLR 563, where the Court observed as under:
..................................
19. In the present case, admittedly, after inflicting the punishment of compulsory retirement upon the respondent herein, a specific show cause notice was given before taking the decision to forfeit her gratuity. Thus, an independent decision is taken fulfilling this procedural requirement which is mandatory as held in M/s Bharath Gold Mines Ltd. (supra). But the next question is as to whether it satisfies the tests on which judicial review of such an order can be undertaken.
22. After considering these arguments, we find that argument of the learned counsel for the respondent has to prevail. We have gone through charge-sheet as well as enquiry report. No doubt, in the charge- sheet as many as 24 accounts are mentioned where the respondent had given loans or other financial accommodation either beyond her powers or without obtaining proper securities. That would show that certain accounts were overdrawn. Even the operation of these accounts was not satisfactory. However, whether the appellant-
Bank ultimately suffered loss and what was the actual loss is not reflected. No doubt, the irregularities committed by the respondent may have exposed the Bank to such losses. However, that is entirely different from loss having been actually suffered by the bank. Even if some accounts became bad and the Bank had to file suits for recovery concerning those accounts against the defaulting parties, that would not automatically lead to the conclusion that the loss/damage has been suffered. It is possible that Bank is able to recover full money in those proceedings. Whether that happened in fact or not and whether loss is actually suffered or not is not discernible from either the charge-sheet or the enquiry report.
23. It is for this reason that it was incumbent upon the appellant-Bank to mention specifically about the actual loss having been suffered, if it suffered, in the show cause notice itself with particulars of that loss in order to enable the respondent to meet the same. That has not been done even in the final order. Though the figure of `4 crores is given, in the final order, even that is not substantiated by giving particulars thereof. We are, therefore, of the opinion that the show cause notice or the final orders passed, forfeiting the gratuity, do not meet the legal requirements and have to be set aside.
::: Downloaded on - 29/09/2019 03:10:51 :::HCHP 215(iv)d) We are in agreement with the reasoning given in Anju Mathur's case. In the instant case, entire gratuity of .
petitioner was withheld by the respondents-bank. There is no order on record to show that any show cause notice was given to the petitioner before withholding his gratuity. It is not even the case of the respondents-bank that any financial loss was caused to it by any act of the petitioner. Thus, though holding that gratuity can be forfeited even in cases of compulsory retirement imposed by way of penalty, we do not find any infirmity with the decision of learned Single Judge in directing the release of gratuity in the facts of this case. We are informed that entire gratuity stands released to the petitioner subsequent to impugned decision. Point is answered accordingly.
6. Interest:
6(i) Petitioner was terminated from the service of respondents-bank on 3.11.1993 with immediate effect.
However, in compliance to the judgment passed on 17.12.1998 in CWP No. 438 of 1994, he has been compulsorily retired on 19.03.1999. The gratuity was declined to the petitioner by the respondents-bank, vide annexure P-1, dated 9.12.1999, No ::: Downloaded on - 29/09/2019 03:10:51 :::HCHP 22 separate order passed by the respondents-bank for withholding the gratuity has been brought on record.
.
6(ii) Learned Single Judge, vide impugned judgment dated 21.10.2010 in CWP No.133 of 2001, has held the petitioner entitled to gratuity. In compliance with this judgment, the gratuity had since been released to the petitioner. For reasons different than assigned by the learned Single Judge, we have also held in preceding paras that in the instant case, petitioner is entitled to have gratuity. Next comes the question of interest payable on withheld gratuity. Section 7(3A) of Payment of Gratuity Act is relevant in this regard and is reproduced hereinafter:-
"7(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."
6(iii) It is apt in this regard to refer to the judgment passed by Hon'ble Apex Court in (2003) 3 SCC 40, titled H. Gangahanume Gowda Vs. Karnataka Agro Industries Corpn. Ltd, wherein it was held that there is clear mandate in ::: Downloaded on - 29/09/2019 03:10:51 :::HCHP 23 the provisions of Section 7 of Payment of Gratuity Act, to the employer to pay gratuity within time and to pay interest on .
delayed payment of gratuity. The relevant paras of this judgment are extracted hereinafter:-
"7. It is evident from Section 7(2) that as soon as gratuity becomes payable, the employer, whether any application has been made or not, is obliged to determine the amount of gratuity and give notice in writing to the person to whom the gratuity is payable and also to the controlling authority specifying the amount of gratuity. Under Section 7(3), the employer shall arrange to pay the amount of gratuity within 30 days from the date it becomes payable. Under subsection 3(A) of Section 7, if the amount of gratuity is not paid by the employer within the period specified in sub-section (3), he shall pay, from the date on which the gratuity becomes payable to the date on which it is paid, simple interest at such rate not exceeding the rate notified by the Central Government from time to time for repayment of long term deposits; provided that no such interest shall be payable if the delay in the payment is due to the fault of the employee and the employer has obtained permission in writing from the controlling authority for the delayed payment on that ground.
From the provisions made in Section 7, a clear command can be seen mandating the employer to pay the gratuity within the specified time and to pay interest on the delayed payment of gratuity. No discretion is available to exempt or relieve the employer from payment of gratuity with or without interest as the case may be. However, under the proviso to Section 7(3A), no interest shall be payable if delay in payment of gratuity is due to the fault of the employee and further condition that the employer has obtained permission in writing from the controlling authority for the delayed payment on that ground.
Under Section 8, provision is made for recovery of gratuity payable under the Act, if not paid by the employer within the prescribed time. The Collector shall recover the amount of gratuity with compound interest thereon as arrears of land revenue and pay the same to the person entitled. A penal provision is also made in Section 9 for non-payment of gratuity. Payment of gratuity with or without interest as the case may be does not lie in the domain of discretion but it is a statutory compulsion. Specific benefits expressly given in a social beneficial legislation cannot be ordinarily denied. Employees on retirement have valuable rights to get gratuity and any culpable delay in payment of gratuity must be visited with the penalty of payment of interest was the view taken in State of Kerala & Ors. vs. M.Padmanabhan Nayyar [1985 (50) FLR 145]. Earlier there was no provision for payment of interest on the delayed payment of gratuity. Sub-section (3A) ::: Downloaded on - 29/09/2019 03:10:51 :::HCHP 24 was added to Section 7 by an amendment, which came into force with effect from 1st October, 1987. In the case of Charan Singh vs. M/s. Birla Textiles and Another [1988 (57) FLR 543 SC], this aspect was noticed in the following words: "There was no provision in the Act for payment of interest when the same .
was quantified by the Controlling Authority and before the Collector was approached for its realization. In fact, it is on the acceptance of the position that there was a lacuna in the law that Act 22 of 1987 brought about the incorporation of sub- section 3(A) in Section 7. That provision has prospective application."
6(iv) Even though, interest is payable on delayed payment of gratuity, yet another point to be considered in this regard is, whether interest would still be payable, where the entitlement of the employee to gratuity was in-doubt. This point has also been answered by the Hon'ble Apex Court in the above judgment, reproduced hereinafter:-
"9. It is clear from what is extracted above from the order of learned Single Judge that interest on delayed payment of gratuity was denied only on the ground that there was doubt whether the appellant was entitled to gratuity, cash equivalent to leave etc., in view of divergent opinion of the courts during the pendency of enquiry. The learned Single Judge having held that the appellant was entitled for payment of gratuity was not right in denying the interest on the delayed payment of gratuity having due regard to Section 7(3A) of the Act. It was not the case of the respondent that the delay in the payment of gratuity was due to the fault of the employee and that it had obtained permission in writing from the controlling authority for the delayed payment on that ground. As noticed above, there is a clear mandate in the provisions of Section 7 to the employer for payment of gratuity within time and to pay interest on the delayed payment of gratuity. There is also provision to recover the amount of gratuity with compound interest in case amount of gratuity payable was not paid by the employer in terms of Section 8 of the Act. Since the employer did not satisfy the mandatory requirements of the proviso to Section 7(3A), no discretion was left to deny the interest to the appellant on belated payment of gratuity. Unfortunately, the Division Bench of the High Court, having found that the appellant was entitled for interest, declined to interfere with the order of the learned Single Judge as regards ::: Downloaded on - 29/09/2019 03:10:51 :::HCHP 25 the claim of interest on delayed payment of gratuity only on the ground that the discretion exercised by the learned Single Judge could not be said to be arbitrary. In the first place in the light of what is stated above, the learned Single Judge could not refuse the grant of interest exercising discretion as against .
the mandatory provisions contained in Section 7 of the Act.
The Division Bench, in our opinion, committed an error in assuming that the learned Single Judge could exercise the discretion in the matter of awarding interest and that such a discretion exercised was not arbitrary."
Thus, there is no escape from concluding that interest on delayed payment of gratuity is payable by the respondents-bank.
7.
r to In view of the above discussions, LPA No. 353 of 2011, filed by the respondents-bank is dismissed. LPA No. 128 of 2011, filed by writ petitioner, is allowed with following directions:-
(i) The decision of the respondents-bank forfeiting 1/3rd pension of the petitioner is quashed and set aside.
Respondents-bank is directed to pass a fresh order within a period of three months, in respect of determination of compulsory retirement pension under Regulation 33 of the UCO Bank (Employees') Pension Regulations, 1995, after issuing notice to the petitioner and after giving him an opportunity of hearing.
::: Downloaded on - 29/09/2019 03:10:51 :::HCHP 26(ii) Respondents-bank is directed to pay within three months interest @ 6% per annum to the petitioner on withheld .
gratuity w.e.f. 19.03.1999, till its actual payment.
Both the appeals are accordingly disposed of, so, also the pending application(s), if any.
(Dharam Chand Chaudhary),
Judge
r (Jyotsna Rewal Dua),
Judge
5.09.2019 (rohit)
::: Downloaded on - 29/09/2019 03:10:51 :::HCHP