Kerala High Court
Hdfc Bank Ltd vs The Regional Labour ...
Author: A.M.Shaffique
Bench: A.M.Shaffique
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT:
THE HONOURABLE MR.JUSTICE A.M.SHAFFIQUE
FRIDAY, THE 29TH DAY OF NOVEMBER 2013/8TH AGRAHAYANA, 1935
WP(C).No. 16283 of 2011 (I)
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PETITIONER :
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HDFC BANK LTD,VEEYEM TOWERS,PALARIVATTOM
KOCHI-25.
BY ADVS.SRI.SAJI VARGHESE
SMT.MARIAM MATHAI
RESPONDENTS :
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1. THE REGIONAL LABOUR COMMISSIONER(CENTRAL)
(CONTROLLING AUTHORITY UNDER THE PAYMENT
OF GRATUITY ACT), KENDRIYA SHRAM SADHAN,
KAKKANAD.P.O., KOCHI.
2. THE ASSISTANT LABOUR COMMISSIONER
(CENTRAL), (CONTROLLING AUTHORITY UNDER THE
PAYMENT OF GRATUITY ACT), KENDRIYA SHRAM SADHAN
KAKKANAD.P.O, KOCHI.
3. MR.S.RAMACHANDRAN,'HARI PRIYA', GRA 224,
GOWREESHAPATTOM, THIRUVANANTHAPURAM-695004.
R3 BY ADVS. SRI.B.ASHOK SHENOY
SMT.LAKSHMI B.SHENOY
THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD
ON 31/07/2013, ALONG WITH WPC. 16286/2011,THE COURT
ON 29-11-2013 DELIVERED THE FOLLOWING:
BP
WP(C).No. 16283 of 2011 (I)
APPENDIX
PETITIONER'S EXHIBITS :
P1: COPY OF THE CHARGE SHEET DATED 7/2/2007 ISSUED TO THE R3.
P2: COPY OF ORDER OF THE DISCIPLINARY AUTHORITY
DT 27/11/2007.
P3: COPY NOTICE SENT BY THE PETITIONER TO THE R3
DT 14/8/2009.
P4: COPY OF THE SENT BY THE R3 TO THE PETITIONER.
P5: COPY OF ORDER DT 12/12/2009 ISSUED BY THE PETITIONE TO
THE R3.
P6: COPY OF THE SAID ORDER OF THE R2 DT 30/9/2010.
P7: COPY OF THE ORDER OF THE R1 DT 30/5/2011.
RESPONDENT'S EXHIBITS :
EXT.R3(a): COPY OF LETTER NO. HDFC/PER/A-1/R-583/2/2008
DT 29/5/2008 ISSUED TO R3 BY PETITIONER.
EXT.R3(b): COPY OF COUNTER STATEMENT DT 19/8/2008 FILED BY
PETITIONER BEFORE R2 IN GA NO.48/12/2008/D2
EXT.R3(c): COPY OF REPLICATION DT 19/9/2008 FILED BY PETITIONER
BEFORE R2 IN GA NO. 48/12/2007/D2.
//TRUE COPY//
P.A. TO JUDGE
BP
A.M.SHAFFIQUE, J.
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W.P.(C) Nos. 16283 of 2011-I
&
16286 of 2011 - I
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Dated this the 29th November, 2013
J U D G M E N T
The above writ petitions are filed by a common petitioner challenging separate orders passed by the Asst. Labour Commissioner (Central) and Regional Labour Commissioner (Central) in respect of orders passed under the Payment of Gratuity Act (hereinafter referred to as 'the Act'). Since the issues involved are common, they are decided together.
2. In W.P.(C) No. 16283/2011, the petitioner challenges Exts. P6 and P7 orders passed by the authorities under the Act directing payment of gratuity to the 3rd respondent.
3. In W.P.(C) No. 16286/2011, the petitioner challenges Exts.P5 and P6 orders passed by the second and first respondents respectively directing payment of gratuity W.P.(C) Nos. 16283 of 2-011-I & 16286 of 2011 - I 2 to the 3rd respondent.
4. The facts involved in the above cases would disclose that the 3rd respondent in both the cases were dismissed from service of the petitioner Bank after conducting necessary enquiry and the order of dismissal has become final. Subsequently, the 3rd respondent in these cases, approached the 2nd respondent preferring claim for gratuity.
5. The petitioner in W.P.(C)No.16283/2011 contended that the 3rd respondent joined service of Lord Krishna Bank on 1.6.1983 which was taken over by Centurion Bank of Punjab Ltd. and later by the petitioner Bank. He was dismissed from service with effect from 30.11.2007 and by that time he had 24 years and 6 months continuous service. He claimed gratuity of Rs. 3,50,000 with interest at 10%. The petitioner Bank contended that since he was dismissed from service, his gratuity was forfeited as per section 4(6) W.P.(C) Nos. 16283 of 2-011-I & 16286 of 2011 - I 3
(b) (ii) of the Act, as it was proved that his misconduct involved moral turpitude. The 2nd respondent found that before issuing an order of forfeiture of gratuity, it is essential to issue a notice to the concerned person. The Bank issued forfeiture notice only on 14.8.2009 to which the 3rd respondent gave a reply. The gratuity case was filed on 1.7.2008 after rejection of the appeal filed by the 3rd respondent. The notice was issued after filing of the gratuity case. Since it is found that the Bank took steps to forfeit gratuity only after proceedings were initiated by the Controlling Authority, the forfeiture is bad in law and therefore the bank is under obligation to pay the gratuity.
6. In W.P.(C) No. 16286/2011 also, the 3rd respondent was dismissed from service with effect from 3.11.2007 after putting up service of 28 years and 6 months. He also claimed gratuity of Rs. 3,50,000/-. In his case also the application for gratuity was filed on W.P.(C) Nos. 16283 of 2-011-I & 16286 of 2011 - I 4 8.7.2008. The Bank had issued forfeiture notice only on 14.8.2008 which was returned with the remarks "addressee left, present address not known". It is indicated that issuance of notice forfeiting his gratuity after notice from the Controlling Authority cannot be sustained and therefore the Controlling Authority directed payment of gratuity.
7. In both the cases, the Appellate Authority concurred with the view expressed by the Controlling Authority.
8. It is not in dispute that forfeiture of gratuity can be made only in cases involving moral turpitude. The Bank has to form an opinion that the misconduct alleged against the employee concerned amounts to act involving moral turpitude. Such a finding can be arrived at only after notice to the concerned employee.
9. In both the cases, the Bank had issued notice only after the concerned employees had approached the W.P.(C) Nos. 16283 of 2-011-I & 16286 of 2011 - I 5 Controlling Authority. In one case the notice was served and in the other case there is no service of notice, as the employee was not available in the said address.
10. The learned counsel for the parties relied upon the following judgments.:
(i) Canara Bank v. Debasis Das (2003) 4 SCC
557).
"Concept of natural justice has undergone a great deal of change in recent years. Rules of natural justice are not rules embodied always expressly in a statute or in rules framed thereunder. They may be implied from the nature of the duty to be performed under a statute. What particular rule of natural justice should be implied and what its context should be in a given case must depend to a great extent on the facts and circumstances of that case, the framework of the statute under which the enquiry is held".
W.P.(C) Nos. 16283 of 2-011-I & 16286 of 2011 - I 6
(ii) State Bank of India v. Bela Bagchi (2005) 7 SCC
435).
"15. A bank officer is required to exercise higher standards of honesty and integrity. He deals with money of the depositors and the customers. Every officer/employee of the bank is required to take all possible steps to protect the interests of the bank and to discharge his duties with utmost integrity, honesty, devotion and diligence and to do nothing which is unbecoming of a bank officer. Good conduct and discipline are inseparable from the functioning of every officer/employee of the bank".
(iii) Divisional Controller, KSRTC (NWKRTC) v. A. T.Mane (2005) 3 SCC 254).
"9. From the above it is clear that once a domestic tribunal based on evidence comes to a particular conclusion, normally it is not open to the Appellate Tribunals and courts to substitute their subjective opinion in the place of the one arrived at by the domestic tribunal. In the present case, there is evidence of the inspector who checked the bus which W.P.(C) Nos. 16283 of 2-011-I & 16286 of 2011 - I 7 establishes the misconduct of the respondent. The domestic tribunal accepted that evidence and found the respondent guilty. But the courts below misdirected themselves in insisting on the evidence of the ticketless passengers to reject the said finding which, in our opinion, as held by this Court in the case of Rattan Singh is not a condition precedent. We may herein note that the judgment of this Court in Rattan Singh has since been followed by this Court in Devendra Swamy v. Karnataka SRTC".
(iv) Indu Bhushan Dwivedi v. State of Nharkhand (2010) 11 SCC 278).
" As a general rule, an authority entrusted with the task of deciding lis between the parties or empowered to make an order which prejudicially affects the rights of any individual or visits him with civil consequences is duty-bound to act in consonance with the basic rules or natural justice including the one that material sought to be used against the person concerned must be disclosed to him and he should be given an opportunity to explain his position. This unwritten right of hearing is fundamental to a just decision, which forms an integral part of the concept of rule W.P.(C) Nos. 16283 of 2-011-I & 16286 of 2011 - I 8 of law. This right has its roots in the notion of fair procedure. It draws the attention of the authority concerned to the imperative necessity of not overlooking the cause which may be shows by the other side before coming to its decision".
(v) Natwar Singh v. Director of Enforcement (2010) 13 SCC 255).
"26. Even in the application of the doctrine of fair play there must be real flexibility. There must also have been caused some real prejudice to the complainant; there is no such thing as a merely technical infringement of natural justice. The requirements of natural justice must depend on the circumstances of the case, the nature of the inquiry, the rules under which the tribunal is acting, the subject-matter to be dealt with and so forth. Can the courts supplement the statutory procedures with requirements over and above those specified? In order to ensure a fair hearing, courts can insist and require additional steps as long as such steps would not frustrate the apparent purpose of the legislation.
W.P.(C) Nos. 16283 of 2-011-I & 16286 of 2011 - I 9
(vi) Dhanalakshmi Bank Ltd. v. N.R. Ramachandran (2012 KHC 270) a learned Judge of this Court held as under:
"In Ahmedabad Municipal Corporation v. Ellvina Samualbhai Christian, 2002 (1) LLJ 343 an employee of the Ahmedabad Municipal Corporation was dismissed from service after holding a domestic enquiry. the employee thereafter moved the Controlling Authority under the Act seeking payment of gratuity. It was contended that gratuity has not been paid though no order of forfeiture had been passed. The Controlling Authority passed an order directing the employer to pay gratuity. The appeal therefrom was dismissed by the Appellate Authority. The Ahmedabad Municipal Corporation thereupon moved the High Court of Gujarat challenging those orders. A learned Single Judge of the Gujarat High Court held that unless a specific order for forfeiture of gratuity, either in part or as a whole, has been passed by the employer, the W.P.(C) Nos. 16283 of 2-011-I & 16286 of 2011 - I 10 employee is entitled to receive gratuity. A similar view was taken by a learned Single Judge of the Allahabad High Court in Hindalco Industries Ltd. v. Appellate Authority, 2004 (III) LLJ 148. It was held that right to receive gratuity is a statutory right and therefore, to forfeit the gratuity which an employee is entitled to, an order is required to be passed determining the quantum of gratuity forfeited after giving an opportunity to the employee. The relevant portion of the judgment is as follows:
"4. The Payment of Gratuity Act, 1972, gives a statutory right to an employee for payment of gratuity on his superannuation, retirement or resignation, or on his death or disablement due to accident or disease. S.4(6)(a) of the Act provides that 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 W.P.(C) Nos. 16283 of 2-011-I & 16286 of 2011 - I 11 the extent of the damage or loss so caused. Sub-S.6(b), provides that 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.
5. The Scheme of the Act and the provisions of S.4(6) (a) and (b) shows that for depriving an employee his statutory right to receive gratuity, an order must be passed forfeiting gratuity, and conscious decision to be taken with regard to reasons specified in sub- section (a) and to damage or loss so caused. The sub-section (b) after its amendment by Act No.26 of 1984 (with effect from February 11, 1981) to the effect that gratuity must be W.P.(C) Nos. 16283 of 2-011-I & 16286 of 2011 - I 12 wholly or in part forfeited, gives discretion to the employer and thus postulates application of mind and recording of reasons.
6. In the present case there is no averment that any express order was passed by the employer forfeiting petitioner's right to receive gratuity. In Remington Rand of India Ltd. v. The Workmen, AIR 1970 SC 1421:
1969 (3) SCC 913, the Supreme Court considered the qualifying period for payment of gratuity, and the consequences of payment of gratuity on the termination of services for misconduct. It was held that gratuity is paid to ensure good conduct throughout the period that the workman serves his employer is an accepted proposition. The clause as to misconduct covers the act which may vary in degree of gravity, nature and its impact on the discipline and the working of the concern.
All these acts may not result in loss capable to being calculated in terms of money. There may be an action which may forthwith W.P.(C) Nos. 16283 of 2-011-I & 16286 of 2011 - I 13 disentitle the workman from retaining his employment and justifying his dismissal. It appears that after this pronouncement, the Act was amended and that a provision was made under S.4(6) (b) for forfeiture of gratuity either wholly or partially. The discretion given to the employer must be based upon the material and the reasons recorded, after serving principle of natural justice and these conditions postulate an order to be passed by the employer. The termination of services of an employee on the grounds contemplated under S.4(6)(a) and
(b), by itself does not entitle the employer to forfeit gratuity payable to an employee. The right of an employer to terminate the services of an employee under the Certified Standing Orders, or Service Conditions on any such act given in S.4(6)(a) and (b), of the Act of 1972, is circumscribed and restricted to holding a just and fair domestic enquiry serving principles of natural justice, which W.P.(C) Nos. 16283 of 2-011-I & 16286 of 2011 - I 14 may be examined and justified in industrial adjudication, in which the proportionality of punishment may be examined under S.11A of the Industrial Disputes Act, 1947. The Industrial adjudicature may find the domestic enquiry and punishment to be just, fair and proper, but these findings by themselves do not serve the requirements of S. 4(6) (a) and
(b) of the Payment of Gratuity Act, 1972. The right to receive gratuity is a statutory right. It is not sub-servient to the common law rights of the employer to terminate the services of an employee. In order to forfeit the statutory right of gratuity, qualified by expression 'to the extent of damage or loss so caused' in sub-section (6)(b), the quantum of forfeiture has to be determined, and thus it requires an order, which can only be passed after giving opportunity to the employee. When the forfeiture, even if by an express and reasoned order is challenged before the Controlling Authority under the W.P.(C) Nos. 16283 of 2-011-I & 16286 of 2011 - I 15 Act, the employer must satisfy the authority in proceedings under S.7(4) of the Act, with the justification of forfeiture".
11. Having regard to the nature of contentions urged, the short question to be considered is whether the procedure adopted by the Bank in issuing notice to the 3rd respondent in these cases are valid notices as contemplated under the statute to enable the Bank to forfeit the gratuity.
12. Section 4(6) (a) and (b) read of the Act reads as under:
(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 5 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.
W.P.(C) Nos. 16283 of 2-011-I & 16286 of 2011 - I 16
13. From a bare reading of the above provision it is clear that gratuity of an employee can be forfeited to the extent of damage or loss caused to the employer on account of any wilful omission or negligence or destruction of property of the employer. Provision further indicates that the gratuity payable to an employee may be wholly of partially forfeited, if the services has been terminated for his riotous or disorderly conduct or any other act or violence or if the services had been terminated for an act which constitutes an offence involving moral turpitude, provided such offence is committed by him in the course of employment.
14. In the present case the contention is that the services of the employee were terminated for an act which constitutes an offence involving moral turpitude. A Division Bench of this Court in K.C.Mathew v. Plantation W.P.(C) Nos. 16283 of 2-011-I & 16286 of 2011 - I 17 Corporation of Kerala Ltd. (2000) III LLJ 637) held that the gratuity being a statutory right cannot be forfeited unless the services of the employee has been terminated for the reasons stated under S.4(6) of the Act. It is not in dispute that if no loss has been caused to the employer, there cannot be any forfeiture under S.4(6)(a). Even in respect of forfeiture under S.4(6)(b), there is a discretion with the employer to forfeit the gratuity either wholly or partially. It depends upon the facts and circumstances of each case. Therefore once the employee is terminated from service, a right accrues to the employer to either exercise the right of forfeiture either wholly or partially. It again depends upon whether the employee is involved in commission of an offence involving moral turpitude. Normally an employee is entitled for gratuity on the date of his retirement or superannuation as the case may be or at least within a reasonable period. In the case of persons W.P.(C) Nos. 16283 of 2-011-I & 16286 of 2011 - I 18 terminated from service, a right to forfeit gratuity shall be passed within a reasonable time. Therefore issuance of a notice to withhold the gratuity is a requirement which cannot be dispensed with. In Gujarat State Fertilisers and Chemicals Ltd. v. Surendra T Amin (2005) 1 LLJ
400) the Gujarat High Court has held that the contention regarding forfeiture cannot be raised for the first time before the authority on account of the fact that exception is carved out in S.4 to protect the damage caused to the employer. Further this issue is covered by a judgment of the learned Single Judge of this Court in Dhanalaxmi Bank Ltd. case (supra). In the light of the aforesaid view taken by this Court, I am of the view that the respondent authorities were justified in directing payment of gratuity as the petitioner Bank did not exercise the option for forfeiture of the gratuity within a reasonable time. W.P.(C) Nos. 16283 of 2-011-I & 16286 of 2011 - I 19 Hence the writ petitions are dismissed.
Sd/-
A.M.SHAFFIQUE, JUDGE
rka /true copy/