High Court
Case Details
WP(C) 7738/2004 PRESENT HON’BLE MR JUSTICE UJJAL BHUYAN JUDGMENT AND ORDER(ORAL) By way of this petition under Article 226 of the Constitution of India, p etitioner seeks a direction to the respondents to release an amount of Rs.3,58, 134.02 towards his service benefits under different heads. Case of the petitioner is that he was serving as Scale Officer-I in the 2. Central Bank of India( Bank). A disciplinary proceeding was initiated against hi m wherein he was found guilty of the charges brought against him. Thereafter, di sciplinary authority passed order dated 25.2.1998 removing the petitioner from s ervice with effect from the said date. Petitioner challenged the order of remova l before this Court in Civil Rule No.6256/1998. This Court by the judgment and o rder dated 22.4.2002 dismissed the writ petition but directed the Bank to releas e the outstanding dues of the petitioner after adjusting the admitted loan liab ility of Rs.1,20,479.55. Alleging non-compliance of the judgment and order of th is Court, petitioner filed a contempt petition, which was numbered and registere d as COP(C) No.161/2003. This Court disposed of the contempt petition by order d ated 25.3.2004 with a direction to the Bank to release the entire retiral benefi ts due to the petitioner after deducting loan liability amounting to Rs.1,20,479 .55. The dues were directed to be paid within a period of eight weeks. Petitione r was given liberty to approach the Court again if need arose. Though an amount of Rs.93,630.00 was paid to the petitioner on 4.9.2002 towards provident fund c ontribution of the petitioner, petitioner contends that Bank had deducted excess ive amount from his provident fund contribution. According to the petitioner, fo llowing amount is due to the petitioner to which he is legally entitled :- (cid:28) a) Difference in amount shown in Provident Fund Rs. 27,167.00 Bank contribution paid on 15.7.04 = 1,20,787 Petitioner’s contribution paid on 4.9.02 (-) 93,630/- Rs. 27,167/- b) Excess amount deducted by the bank against Provident Fund Loan Rs. 8,782.00 c) Gratuity Rs. 1,92,000. 00 d) Leave encashment Rs. 50,000.00 e) Unpaid salaries for the months of July, August, September,1995 while working As Branch Manager, Kokrajhar Branch Rs. 27,719.86 f) Unpaid salaries for the months of March, April,May and Upto 10.6.96 at Dhubri Branch Rs. 36,459.61 g) increment for the year 1996, 1997,1998 falling due on 1 February of the year Rs. 8430.00 h) House rent for the months of July,August, September, October and November 1995 Rs. 4375.00 i) T.A. Bill which was adjusted by debiting From personal account No.1521/B Rs. 1200.00 Total Rs. 3,58,134.02 (cid:28) 3. Though the petitioner had filed another contempt petition before this Cou rt, being COP (C) No.520/2004, the same was dismissed by this Court holding that a separate cause of action had arisen. Accordingly, the present petition has be en filed seeking a direction for payment of the aforesaid amount with interest @ 18%. 4. According to the petitioner, the aforesaid amounts are due to him by vir tue of the provisions contained in Central Bank of India (Officers) Service Regu lations, 1979. As the said amounts have not been paid to the petitioner, he ha s approached this Court by filing the present petition seeking the reliefs as in dicated above.
Legal Reasoning
1. The stand taken by the respondents is that petitioner was charged with m isconduct and causing pecuniary loss to the Bank. Charge memo dated 16.10.1996 w as issued to the petitioner wherein as many as 5 charges were levelled against him. Petitioner’s show cause reply was not found satisfactory and, therefore, the Bank authority decided to hold a domestic enquiry. At the conclusion of the domestic enquiry, Enquiry Officer submitted his reply dated 30.3.1997 whereby h e held Charge No.1 as not proved, Charge Nos.2 and 3 as partially proved and Cha rge Nos.4 and 5 as proved. Following the enquiry report, the disciplinary author ity passed an order dated 25.2.1998 removing the petitioner from service. That was challenged by the petitioner in Civil Rule No.6256/1998, which was, however, dismissed on contest. But the Bank was directed to release the balance amount d ue to the petitioner after deducting the outstanding loan liability payable to t he Bank amounting to Rs.1,20,479.55. Petitioner had submitted representation on 14.5.2002 claiming his terminal benefits but the same was rejected by the Bank authority on 10.3.2003 giving sufficient reasons. The petitioner had filed con tempt petition before this Court, being COP (C) No.161/2003, but the same was closed by this Court by asking the Bank to release the entire retiral benefits d ue to the petitioner after deducting the above loan liability amount. Though the Bank was directed to release the said amount within a period of eight weeks, on an application filed by the Bank, time limit was extended. Thereafter, the Bank released an amount of Rs.1,20,797.00 to the petitioner towards settlement of Ba nk’s contribution of provident fund amount which was accepted by the petitioner. Petitioner was also paid Rs.93,630.00 towards his contribution of provident fun d amount. The difference in the two figures of provident fund contribution has b een explained by the respondents as on account of deduction for unpaid loan liab ility while petitioner was serving at Dhamdhama branch of the Bank. So far the claim of gratuity is concerned, the stand taken is that petit 2. ioner had caused pecuniary loss to the Bank to the tune of Rs.45 lakhs by his a cts of misconduct and, therefore, he had lost his right to claim the gratuity am ount. All other claims of the petitioner have been factually disputed by the Ban k. According to the respondents, petitioner was unauthorisedly absent from duty and no leave was sanctioned to him. Therefore, the claim of the petitioner is d enied.
Legal Reasoning
Heard Mr.B.Banerjee, learned counsel for the petitioner. Also heard Mr.N 3. .C. Das, learned senior counsel assisted by Mr. M.K.Mishra, learned counsel for the respondents. 4. Mr. Banerjee, learned counsel for the petitioner submits that petitioner is legally entitled to the various amounts indicated in the writ petition, tota l of which comes to Rs. 3,58,134.02. The claim of the petitioner have been give n in details in paragraph 9 of the writ petition. Mr Banerjee has also laid em phasis on the gratuity amount due to the petitioner which comes to Rs.1,92,000 .00. He submits that under no circumstances, the Bank can withhold the said amo unt. He has also referred to the provisions of Section 4(6) of the Payment of G ratuity Act, 1972 and has contended that to withhold the gratuity amount, the em ployer must first quantify the extent of damage or loss caused to the Bank by t he employee and only, thereafter, the gratuity amount to the extent to such dama ge or loss quantified can be withheld. Referring to the orders of this Court as already noticed, he submits that denial of the amount due to the petitioner is i llegal and unjustified. He, therefore, prays for appropriate intervention of t his Court to ensure that the petitioner is not deprived of his legitimate dues. 5. Mr. N.C. Das, learned senior counsel, on the other hand, submits that af ter a full-fledged domestic enquiry the petitioner was removed from service. Be cause of the misconduct of the petitioner which had caused pecuniary loss of Rs .45 lakhs to the Bank, petitioner has lost his right to claim the gratuity amou nt. Regarding the other claims, Mr. Das, referring to the statements made in par agraphs 8 and 9 of the counter affidavit of the Bank, argues that all the claims of the petitioner are highly disputed. Deduction was made because of loan take n by the petitioner from his provident fund account. Petitioner’s claim of sala ry has been denied by invoking the principle of (cid:28)no work no pay (cid:29) as the petitio ner was unauthorizedly absent from duty during the period under consideration. The yearly increments claimed by the petitioner have been disputed and denied as because his conduct was not satisfactory. He, therefore, prays for dismissal of the writ petition. 6. Submissions made have been considered.
Decision
From paragraph 9 of the writ petition, it is seen that petitioner has ra 7. ised various other claims in addition to the claim of gratuity for an amount of Rs.1,92,000.00. All the other claims have been factually disputed by the respond ents. The Court has also examined the claims put forward by the petitioner and the objections raised by the respondents. The claims appear to be disputed and w ould require adjudication on facts. In view of the factual nature of the claim and considering the objections raised by the respondents, the Court is not i nclined to entertain the other claims of the petitioner save and except the cl aim of gratuity. 8. In so far the claim of gratuity of the petitioner is concerned, the sta nd of the respondents, as can be seen from the affidavit filed and from the sub mission of the learned senior counsel appearing for the respondents, is that be cause of pecuniary loss of Rs.45 lakhs caused to the Bank by the petitioner by his proven act of misconduct, he has lost his right to claim the gratuity amount . Question for consideration is whether respondents can withhold the gratu 9. ity amount of the petitioner by contending that because of misconduct of the pe titioner he had caused pecuniary loss of Rs.45 lakhs to the Bank ? 10. The Payment of Gratuity Act,1972 ( Act) which provides for a scheme for payment of gratuity to employees, is a welfare piece of legislation and withh olding of gratuity due to an employee is not permissible under any circumstances other than those enumerated in Section 4(6) of the Act. The conditions under wh ich gratuity can be forfeited are enumerated in sub-section (6) of Section 4 of the Act, which is quoted hereunder :- (cid:28)4(6) Notwithstanding anything contained in sub-section (1),- (a) the gratuity of an employee, whose services have been terminated for any act, willful omission or negligence causing any damage or loss to, or destruct ion of, property belonging to the employer shall be forfeited to the extent of the damage or loss so caused ; (b) ed]- (i) the gratuity payable to an employee [ may be wholly or partially forfeit if the services of such employee have been terminated for the riotous or disorderly conduct or any other act of violence on his part , or (ii) if the service of such employee have been terminated for any act which c onstitutes an offence involving moral turpitude , provided that such offence i s committed by him in the course of his employment. (cid:29) From a reading of the aforesaid provision, it is seen that gratuity of an emplo yee whose services have been terminated for an act of misconduct causing damage or loss can be forfeited to the extent of the damage or loss so caused. There fore, for forfeiture of gratuity, two conditions are required to be fulfilled , namely, (i) service of the employee should be terminated for an act of misco nduct which caused damage or loss to the employer (ii) forfeiture of gratuity s hall be to the extent of the damage or loss so caused. In other words, to invok e the provision of Section 4(6) (1) (a), quantification of the extent of damage or loss so caused is essential. 11. Under the Central Bank of India Employees Gratuity Fund Rules, in case of termination of service of an employee on account of proven misconduct, gratu ity payable shall not be forfeited except where such misconduct causes financial loss to the Bank and in such case, forfeiture of gratuity shall be to the exten In the present case, following charges were framed against the petitione t of the financial loss only. 12. r:- (cid:28) 1) He has not complied with the terms and conditions of advances sanctioned by Regional Office, Guwahati. It some cases, Equitable Mortgage was not created, d ischarge on deposit kept as lien not obtained, pledge of unit certificate not ef fected. 2) He has allowed excess drawings over and above the limits sanctioned by the Re gional Office, Guwahati, beyond his ambit. He did not obtain relevant documents relating to enhancement in some cases, which may result in pecuniary loss to th e Bank. He did not report such adhoc sanctions in the relevant return/statement to higher authorities. 3) He has sanctioned advances not within his delegated powers, without ascertain ing the viability of the same and Maximum Permissible Bank Finance not property worked out. In some cases, relevant documents are not obtained. He has also not reported such sanctions in some cases to higher authorities. 4) The CSO has incessantly allowed temporary overdrafts in Current Accounts with out having powers to do so and without any justification thereof. He allowed clean overdrafts and the same were not reported to higher authorities by him. The accounts turned NPA. 5) The CSO has himself posted and released a cheque in CD a/c No.129 of Kokrajj har Branch( for Rs.30500/-) by debiting only Rs.500/- in the account. By his act ion, a clear overdraft of Rs.29,134/- was created in the account and Bank’s inte rest has been jeopardized. (cid:28) The Enquiry Officer held charge No.1 as not proved. Charge Nos.2 and 3 were held to be partially proved whereas Charge Nos. 4 and 5 were held to be proved. 13. The disciplinary authority by his order dated 25.2.1998 concurred wi th the findings of the Enquiry Officer and imposed the penalty of removal from s ervice which was held to be not a disqualification for future employment. I have carefully perused the order of penalty. No- where in the removal order it has been said that misconduct of the petitioner has caused pecuniary loss of Rs.45 l akhs to the Bank. A Single Bench of this Court in the case of Bijan Dhar vs. Central Ba 14. nk of India and Ors. in WP( C) No.3189/2008 referring to the provisions of Secti on 4(6) (a) of the Act and the Central Bank of India Employees Gratuity Fund R ules held that loss sustained by the Bank due to misconduct has to be quantifie d. Learned Single Judge further held that Bank before causing forfeiture of the gratuity must cause an enquiry relating to the extent of loss sustained by t he Bank, giving an opportunity of hearing to the employee. In the facts of that case, learned Single Judge directed release of the gratuity amount alongwith in terest @ 7%. 15. This was challenged by the Bank in appeal, being Writ Appeal No.234/20 10. A Division Bench of this Court by order dated 22.12.2010 dismissed the said appeal observing that forfeiture is permissible only in case there is a financi al loss caused to the Bank which postulates quantification of the financial loss and not likelihood of financial loss. The Division Bench held as under :- (cid:28) In our opinion Rule 12 of the Central Bank of India Employees’ Gratuity Fund R ules makes it clear that forfeiture is permissible in case there is a financial loss caused to the appellant Bank. This postulates quantification of the financi al loss and not the likelihood of a financial loss. The reason for this is that if there is a loss of a small amount of money, a Bank may take a view that it has suffered an enormous loss in terms of its credi bility and its clients may withdraw their deposits with the Bank. This can lead to a completely unreasonable situation detrimental to the interests of the emplo yee. It is for this reason that actual loss is postulated and not potential loss . In so far the present case is concerned, there is no quantification of the finan cial loss caused to the Bank but only the likelihood of the loss. It does not, i n our opinion, meet the requirement of Rule 12 of the Central Bank of India Empl oyees’ Gratuity Fund Rules which requires quantification of the financial loss. (cid:29) 16. The constitutional validity of the Act particularly, Section 4(1)(b) thereof, which is the pivotal section providing for payment of gratuity to the employees, was challenged in Bakshish Singh vs.M/s. Darshan Engineering Works & Ors. reported in AIR 1994 SC 251.Though the High Court had initially stuck do wn the said provision as being unconstitutional, the judgment of the High Court was reversed by the Hon’ble Supreme Court. While upholding the constitutional v alidity of the aforesaid provision, the Apex Court made a detailed survey of th e relevant law and held as under :- (cid:28)7. The aforesaid survey of the relevant authorities shows that in labour juris prudence the concept of (cid:28)gratuity (cid:29) has undergone a metamorphosis over the years. The dictionary meaning may suggest that gratuity is a gratuitous payment, a gif t or a boon made by the employer to the employee as per his sweet-will. It neces sarily means that it is in the discretion of the employer whether to make the pa yment or not and also to choose the payee as well as the quantum of payment. How ever, in the industrial adjudication it was considered as a reward for a long an d meritorious service and its payment, therefore, depended upon the duration and the quality of the service rendered by the employee. At a later stage, it came to be recognized as a retiral benefit in consideration of the service rendered a nd the employees could raise an industrial dispute for introducing it as a condi tion of service. The industrial adjudicators recognized it as such and granted i t either in lieu of or in addition to other retiral benefits such as pension or provident fund depending mainly upon the financial stability and capacity of the employer. The other factors which were taken into consideration while introduci ng gratuity scheme were the service conditions prevalent in the other units i n the industry and the region, the availability or otherwise of the other retir al benefits, the standard of other service conditions etc. The quantum of gra tuity was also determined by the said factors. The recognition of gratuity a s a retiral benefit brought in its wake further modifications of the concept. It could be p aid even if the employee resigned or voluntarily retired from service. The minim um qualifying service for entitlement to it, rate at which it was to be paid and the maximum amount payable was determined likewise on the basis of the said fac tors. It had also to be acknowledged that it could not be denied to the employee on account of his misconduct. He could be denied gratuity only to the extent of the financial loss caused by his misconduct, and no more. Thus even before the present Act was placed on the statute book, the Courts had recognized gratuity a s a legitimate retiral benefit earned by the employee on account of the service rendered by him. It became a service condition wherever it was introduced whethe r in lieu of or in addition to the other retiral benefits. The employees could a lso legitimately demand its introduction as such retiral benefit by raising an i ndustrial dispute in that behalf, if necessary. The industrial adjudicators gran ted or rejected the demand on the basis of the factors indicated above. It is true that while doing so, the industrial adjudicators insisted upon certai n minimum years of qualifying service before an employee could claim it whether on superannuation or resignation or voluntary retirement. This was undoubtedly i nconsistent with the concept of the gratuity being an earning for the services r endered. What is, however, necessary to remember in this connection is that ther e is no fixed concept of gratuity or of the method of its payment. Like all othe r service conditions, gratuity schemes may differ from establishment to establis hment depending upon the various factors mentioned above, the prominent among th em being the financial capacity of the employer to bear the burden. There has commonly been one distinction between a retiral benef it like provident fund and gratuity, viz., the former generally consists of the contribution from the employee as well. It is, however, not a necessary ingredie nt and where the employee is required to make his contribution, there is no unif ormity in the proportion of his share of contribution. Likewise, the gratuity sc hemes may also provide differing qualifying service for entitlement to gratuity. It is true that in the case of gratuity an additional factor weighed with the i ndustrial adjudicators and Courts, viz., that being entirely a payment made by t he employer without there being a corresponding contribution from the employee, the gratuity scheme should not be so liberal as would induce the employees to ch ange employment after employment after putting in the minimum service qualifying them to earn it. But as has been pointed out by this Court in the Straw Board M fg. Co. Ltd. case (AIR 1977 SC 941) (supra), in view of the constantly growing unemployment, the surplus labour and meagre opportunities for employment, the pr emise on which a longer qualifying period of service was prescribed for entitlem ent to gratuity on voluntary retirement or resignation, was unsupported by reali ty. In the face of the dire prospects of unemployment, it was facile to assume t hat the labour would change or keep changing employment to secure the paltry ben efit of gratuity. (cid:29) * * * * * * * * * * * * * * * * (cid:28)9. &. & &.It would thus be apparent both from its object as well as its provision s that the Act was placed on the statute book as a welfare measure to improve th e service conditions of the employees. The provisions of the statute were applie d uniformly throughout the country to all establishments covered by it. They app lied to all employees drawing a monthly salary up to a particular limit in facto ries, shops and establishments etc. whether the employees were engaged to do any skilled, semi-skilled, unskilled, manual, supervisory technical or clerical wor k. The provisions of the Act were thus meant for laying down gratuity as one of the minimal service conditions available to all employees covered by the Act. Th ere is no provision in the Act for exempting any factory, shop etc. from the pur view of the Act covered by it except those where, as pointed out above, the empl oyees are in receipt of gratuity or pensionary benefits which are no less favour able than the benefit conferred under the Act. The payment of gratuity under the Act is thus obligatory being one of the minimum conditions of service. The non- compliance of the provisions of the Act is made an offence punishable with impri sonment or fine. It is settled law that the establishments which have no capacit * * * * * * * y to give to their workmen the minimum conditions of service prescribed by the S tatute have no right to exist & & & & & & & & & &. & (cid:29) * (cid:28) & & &. & &The present Act is of the genre of Minimum Wages Act, the Payment of Bonu s Act, the Provident Funds Act, Employees’ State Insurance Act, and other like s tatutes. These statutes lay down the minimum relevant benefits which must be mad e available to the employees. We have solemnly resolved to constitute this count ry, among others, into a socialist republic and to secure to all its citizens, w hich, of course, include workmen, social and economic justice. Article 38 requir es the State to strive to promote the welfare of the people by securing and prot ecting as effectively as it may, a social order in which, among other things, so cial and economic justice shall inform all the institutions of the national life . Article 39 states that the State shall, in particular, direct its policy towar ds securing, among others, that the citizens have the right to an adequate means to livelihood and that the health and strength of workers are not abused. Artic le 41 of the Constitution directs the State to make effective provision, among o thers, for securing public assistance in old age and in other cases of undeserve d want. Article 42 enjoins the State to make provisions for securing just and hu mane conditions of work while Article 43 requires the State to endeavour to secu re by (sic) conditions of work ensuring a decent standard of life and full enjoy ment of leisure and social and cultural opportunities. Article 47 requires that the State shall regard the raising of the level of nutrition and standard of liv ing of its people and the improvement of public health as one of its primary dut ies. Further, there is a restriction placed on the exercise of the fundamental right under Article 19(1) (g) by clause (6) of the said Article. That clause states th at nothing in sub-clause (g) of clause (1) shall affect the operation of any exi sting law or prevent the State from making any law imposing in the interests of the general public reasonable restrictions on the exercise of the right conferre d by that sub-clause. It cannot be disputed that the present Act is a welfare me asure introduced in the interest of the general public to secure social and econ omic justice to workmen to assist them in their old age and to ensure them a dec ent standard of life on their retirement. On both grounds, therefore, viz., that the provisions for payment of gratuity co ntained in Section 4(1) (b) of the Act are one of the minimal service conditions which must be made available to the employees notwithstanding the financial cap acity of the employer to bear its burden and that the said provisions are a reas onable restriction on the right of the employer to carry on his business within the meaning of Article 19(6) of the Constitution, the said provisions are both s ustainable and valid. Hence the decision of the High Court has to be set aside. (cid:29) The Apex Court in the case of Jaswant Singh Gill vs. Bharat Cook 21. ing Coal Ltd and Ors. , reported in (2007) 1 SCC 663 held that the Act provides for a close-knit scheme providing for payment of gratuity. It is a complete code containing detailed provisions covering the essential provisions of a scheme for gratuity. It not only creates a right to payment of gratuity but also lays down the principles for quantification thereof as also the conditions on which an employee may be denied gratuity. The amount liable to be forfeited w ould only be to the extent of damage or loss caused, which has to be quantified and while quantifying the said amount , an opportunity of hearing must be given to the employee. 22. From a conjoint and careful reading of the legal provisions as notice d herein above, it becomes evident that to withhold or to make forfeiture of g ratuity, the employer is first required to quantify the damage or loss caused due to the misconduct of the employee. In the exercise of quantification, the e mployee must be given a reasonable opportunity of hearing. Only after the damage or loss is quantified, the withholding or forfeiture of gratuity should be limi ted to that extent only. 23. In the present case, there is no quantification of the loss suffered by th e Bank. What has been contended is the loss visualized or the possible loss. In the absence of quantification in the manner indicated above, the Bank could no t have withheld the amount of gratuity statutorily due to the petitioner. 24. In view of the discussions made above, this writ petition is partly allowed. Respondents are directed to release the gratuity amount due to the peti tioner within a period of eight(8) weeks from the date of receipt of a certified copy of this order. Since gratuity has been unauthorisedly withheld, the grat uity amount will carry interest @ 7% from the date it became due till its full payment. 25. Parties are left to bear their own cost.