Indian Kanoon - Search engine for Indian Law

"i. Whether the applicant can file the gratuity case in controlling authority Delhi jurisdiction. ii. Whether the delay in filing claim for gratuity can be condoned?

iii. Whether the action of forfeiting the amount of gratuity payable to the applicant on account of quantified loss occurred to the bank? 1f not what amount is payable to him?

29. Mr. Sharma, ld. Counsel highlights that in the order dated 7th March 2013 passed by the Disciplinary Authority, there was no discussion in respect of gratuity at all. Reference is made by the ld. Counsel to the order of the Disciplinary Authority dated 7th March, 2013 to argue that in the said order, various failures of Employee No.2 are noted but there is no discussion of any loss caused to the Bank nor the Disciplinary Authority directing forfeiture of the gratuity. He submits that the gratuity entitlement is a valuable right which accrues in favour of the employees after a fixed term of service and the same cannot be forfeited in all cases. He relies upon the judgment in Union Bank of India v. C.G. Ajay Babu, (2018) 9 SCC 529 to argue that there are cases of moral turpitude, etc. which are punishable under law wherein gratuity can be forfeited. He argued that it is for the Court to decide whether any crime has been committed or not by the employee and it is not for the Bank to decide the same. In the present case, there is not even an FIR filed by the Bank. No criminal charges have been framed and under such circumstances, the Bank cannot on its own forfeit the gratuity amount. He also relies upon the judgment in Jaswant Singh Gill v. Bharat Cooking Coal (2007) 1 SCC 663 in which it was held that the Act not only lays down the right but also lays down the conditions under which the employee may be denied the said right. It is this procedure which has to be scrupulously observed. Thus, he argues that there is no justification in the present case for forfeiting the gratuity. Furthermore, as per Jaswant Singh (supra), the conditions for forfeiture have to be fulfilled i.e., notice has to be given, the loss has to be quantified, and the employee has to be heard, only thereafter the forfeiture can be affected. He further argues that provisions of the Act would prevail over the Rules, especially after the amendments. Reliance is also placed on the judgment in Sujoy Kumar Roy v. Union Bank of India 2013(5) GLT 755 which reiterates that reasonable opportunity of hearing has to be given to the employee during the exercise of quantification of loss. The judgment of the Supreme Court in D.V. Kapoor v. Union of India, (1990) 3 SCC 314 proceeds on similar reasoning wherein the Court held that if the opportunity was not given to the employee, gratuity which is the statutory right, cannot be denied to the employee. In the case at hand, in the order of dismissal there was no quantification of loss and until 2017, there was no notice of forfeiture which was given to Employee No.2. It was only after the employee went to the Controlling Authority that, as an afterthought, the notice of forfeiture was given. State of Kerala v. M. Padmanabhan Nair (1985) 1 SCC 429 is relied upon to argue that gratuity is no longer any bounty to be distributed by the government to its employees on their retirement but has become a valuable right and property in their hands and any culpable delay in the settlement and disbursement thereof must be visited with the penalty of payment of interest at the current market rate till actual payment.

30. Finally, it is submitted by Mr. Sharma, ld. Counsel that the grant of interest is important in the payment of gratuity in case of delay of payment in gratuity by the employer as per section 7(3) and 7(3A) of the Act. The limitation period which is mentioned in the Rules does not apply to the employee and is only meant for the employer. The ld. Counsel further places reliance on the decision of the Delhi High Court in MCD v. Nand Kishore 2003 (67) DRJ 135 to argue that the non-payment of gratuity is a continuing wrong. He also argues that since the Bank did not forfeit the gratuity for 4 years, it constitutes waiver of right to forfeit the gratuity on part of the Bank and now they are estopped from forfeiting the same. He submits that the limitation period would apply to the employer in this case, and that the Bank cannot be permitted to forfeit gratuity after a period of four years.

55. In a banking system, there may be various factual situations which may have resulted in termination of the employee. The misconduct alleged may be at an individual level or at the level of the team, for example, for sanctioning of a loan, only one employee of a bank may not be fully responsible. As per Section 4(6)(a) of the Act, the omission or negligence has to exist and forfeiture can be only to the extent of damage or loss caused to the employer. These are factors which are subjective in nature and would depend on the facts of each case. Gratuity being a statutory right, as held in Hindalco Industries v. Appellate Authority (supra), the standard for forfeiture of gratuity would be much higher. As held in H. Jayaram Shetty v. the Sangli Bank Ltd. 2005 (3) Bom CR 10, the obligation of the employer to pay the gratuity of their employees is an extremely high obligation. The view of the Court was: