IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 12TH DAY OF APRIL, 2019 BEFORE THE HON’BLE MR. L. NARAYANA SWAMY, ACTING CHIEF JUSTICE WRIT PETITION NO.54498/2015 (L-PG) BETWEEN:
1. THE CHAIRMAN AND MANAGING DIRECTOR INDIAN BANK CORPORATE OFFICE NO. 254-260, AVVAISHANMUGHAM ROAD, ROYAPETTAH, CHENNAI - 600 014.
2. THE CHIEF MANAGER INDIAN BANK, CIRCLE OFFICE (NOW KNOWN AS ZONAL OFFICE) 4TH FLOOR, EAST WING, RAHEJA TOWERS, NO. 26-27, M.G.ROAD, BANGALORE - 560 001.
... PETITIONERS (BY SRI.UDAYA SHANKAR RAI. P, ADV.) AND:
SRI M.D.CHANDRASHEKAR S/O LATE DAKSHINA MURTHY, AGE: MAJOR, NO. 150, 18TH MAIN, BTM 2ND STAGE, KUVEMPUNAGAR, BANGALORE - 560 076.
... RESPONDENT (BY SRI.S VITTAL SHETTY, ADV.) THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO QUASH THE ORDER DTD:7.8.2015 PASSED BY THE APPELLATE AUTHORITY UNDER THE PAYMENT OF GRATUITY ACT 1972 AND THE REGIONAL LABOUR COMMISSIONER (CENTRAL) BANGALORE IN GRATUITY APPEAL NO.09/2015-B2 PRODUCED AT ANNEXURE - N.
THIS PETITION COMING ON FOR PRONOUNCEMENT OF ORDER THIS DAY AFTER HAVING HEARD AND RESERVED FOR ORDER ON 27.09.2018, THE COURT MADE THE FOLLOWING:
O R D E R This writ petition is filed against the order dated 7.8.2015 passed by the appellate authority under the Payment of Gratuity Act, 1972 and the Regional Labour Commissioner (Central) Bengaluru in Gratuity Appeal No.09/2015-B2, by which order petitioner Bank is directed to pay Rs.9,48,628/- to the respondent with interest at 10% p.a from 1.8.2010 till actual payment, within 30 days from date of receipt of the order.
2. The facts of the case to be stated in brief are as follows:
The respondent was initially appointed as a clerk with the petitioner bank and was later promoted as an officer. While he was working at J P Nagar Branch, as Branch Manager he was placed under suspension for various acts of irregularities/misconduct committed by him, preliminary Inquiry was held on 19.3.2010 and Regular Inquiry was held on 5.5.2010 and 3.6.2010. In a duly conducted departmental enquiry against him with respect to the above charges which involves fraud, forgery and embezzlement of funds and involving an act of moral turpitude, all the charges were held proved and respondent was imposed with a major penalty of “removal from service which was said, shall not be a disqualification for future employment”.
3. Against the said order, the respondent filed an appeal before the Appellate Authority and the Appellate Authority on going to the grounds raised by the respondent has allowed the appeal by order dated 10.11.2010. Subsequently, the respondent had also preferred a Review Petition dated 28.03.2011, which was dismissed vide order dated 14.05.2011.
4. The petitioner has issued a show cause notice to the respondent on 15.6.2012 seeking his reply for the proposed forfeiture of gratuity. The respondent submitted a detailed reply to the said show cause notice on 30.6.2012 and raised several contentions and requested to rescind the decision of denying the gratuity. On considering the contentions and grounds raised by the respondent in the said reply the petitioner passed an order dated 11.10.2012 and justified the proposal of forfeiture of the gratuity.
5. Aggrieved by the said order of forfeiture of gratuity, the respondent filed an application before the Controlling Authority. The Controlling Authority on conducting a detailed enquiry on the issue of forfeiture of gratuity by the petitioner, has rejected the application filed by the respondent and held that the action of the petitioners in forfeiting the gratuity is in conformity with the provisions of 4(6)(b)(ii) of the Payment of Gratuity Act 1972 as well a Reg. 46(1)(e) of the Indian Bank Officers’ Service Regulations, 1979.
6. Aggrieved by the order passed by the Controlling Authority, the respondent filed an appeal before the Appellate Authority. The Appellate Authority allowed the appeal by its order dated 7.8.2015 and directed the petitioners to pay a sum of Rs.9,48,628/- towards gratuity with simple interest at the rate of 10% p.a. from 1.8.2010 till actual date of payment.
Being aggrieved, the present writ petition is filed by the petitioners.
7. The respondent filed statement of objections and inter alia contended that Section 14 of the Payment of Gratuity Act has overriding effect vis-a-vis any other Act, Rules, contracts etc. In view of this the Officers’ Service Regulations are not relevant and the petitioner cannot contend that the punishment of compulsory Retirement from service imposed on the Respondent was by way of major punishment and thus he is not entitled to claim gratuity, as per the said Regulations.
8. I have heard the learned counsel for the parties and perused the impugned order. The learned counsel for the petitioners submitted that the appellate authority has totally ignored the show cause notice dated 15.6.2012 issued to the respondent before passing the final order of forfeiture of gratuity dated 11.10.2012. The reliance placed by the appellate authority on Rule 8 of the Payment of Gratuity Rules, hereinafter referred to as `the Rules’ is misconceived. The said rule does not fix a definite time frame to the petitioners to issue a notice in Form No.M if the claim of gratuity is not found admissible. The reasoning of the appellate authority that there is delay in issuing notice, without going into merits of the case is totally arbitrary and illegal. The learned counsel placed reliance on Section 4(6)(1)(b)(ii) of the Payment of Gratuity Act, hereinafter referred to as `the Act’ and contended that petitioners are entitled to forfeit the gratuity on termination of an employee for an act in the course of employment, which constitutes an offence involving moral turpitude. It is submitted, the respondent was indulged in several acts of accommodation while dealing with two borrowers named in the charge sheet by unduly favouring them and manipulating the accounts, involving moral turpitude, attracting the above provisions. Thus he prays for allowing the writ petition.
9. The learned counsel for the respondent contends that Section 7(3) of the Act specifies that employer shall pay the amount of gratuity within 30 days from the day it becomes payable and that as per Section 7(4)(a) of the Act, if there is any dispute to the amount of gratuity, the employer shall deposit with the Controlling Authority such amount as he admits to be payable as gratuity and that as per Rule 8 of the Rules, if the claim of gratuity is not found admissible, the employer shall issue a notice in Form M to the applicant employee, nominee or legal heir as the case may be, specifying the reasons why the claim for gratuity is not considered endorsing a copy thereof to the CA. This is not complied by the petitioners in the instant case and the action of forfeiture of gratuity is an afterthought. Therefore, the appellate authority rightly held that the respondent is entitled to gratuity, which cannot be interfered. There has been no allegation of lapse in the charge sheet which amounts to act of offence involving moral turpitude. The charge sheet issued show only one charge under Regulation 3(1) of the Conduct Regulations alleging that account of M/s. Matrix Build Tech Designers Pvt. Ltd., became NPA and recovery of book balance of Rs.198.22 lakhs plus MOI of Rs.25.26 lakhs is posing problem and the Branch has initiated action under SERFAESI Act for recovery. It is no where stated that respondent was benefited in any manner either pecuniary or otherwise from the borrower or that by the said act, the bank has suffered any loss or bank was unable to recover the amount from the borrower. The show cause notice and the order passed were all by a Chief Manager of the Bank, who was not even the Disciplinary Authority when the respondent was in service of the Bank, having no jurisdiction to issue any such letters, pass any orders or to take away the vested rights of the respondent to receive the gratuity amount. Thus the respondent prayed for dismissal of the writ petition.
10. The point that arises for consideration is, whether the appellate authority has committed any error or irregularity in passing the impugned order so as to call for interference by this Court? My finding would be in the negative for the following reasons:
11. Section 4 of the Act stipulates that gratuity shall be payable to the employee on termination of his employment, after he has rendered continuous service for more than 05 years. Section 7(2) of the Act specifies, as soon as gratuity becomes payable, the employer shall whether an application has been made by the employee or not, determine the amount of gratuity and give notice in writing to the persons whom the gratuity is payable and also to the Controlling Authority, specifying the amount of gratuity so determined. Section 7(3) of the Act says that the employer shall pay the amount of gratuity within 30 days it becomes payable to the person to whom the gratuity is payable. Section 7(4)(a) of the Act denotes, if there is any dispute to the amount of gratuity payable to an employee under the Act or as to the admissibility of the claim or in relation to an employee for payment of gratuity or as to the person entitled to receive the gratuity, the employer shall deposit with the Controlling Authority such amount as he admits to be payable as gratuity. As per Rule 8 of the Rules, if the claim of gratuity is not found admissible, the employer shall issue a notice in Form M to the employee, nominee or legal heir as the case may be, specifying the reasons why the claim for gratuity is not considered, endorsing a copy thereof to the Controlling Authority.
12. In the instant case, the petitioners have not issued any intimation to the respondent till 15.6.2012 notifying as to denial of payment of gratuity. The respondent’s services were terminated on 30.7.2010. It was obligatory for the petitioners to communicate their decision denying the payment of gratuity on or before 30.8.2010. The petitioners should have communicated their decision during the stipulated period as per Section 4(6) of the Act. The respondent has submitted three letters requesting for payment of gratuity after a gap of more than a year. Even then the petitioners failed to communicate their decision denying payment of gratuity. It is also required that if employer wants to deny the gratuity, they should issue Form M to the employee giving reasons thereof, endorsing a copy thereof to Controlling Authority. No such notice in Form M was also issued to the respondent as prescribed under the Act & Rules. It is only after a gap of almost more than 01 year 11 months, the petitioners issued a notice and an order communicating their decision to forfeit the gratuity. No reasons are assigned as to the delay of almost two years in communicating their decision to forfeit the gratuity. In the circumstances, the appellate authority was justified in holding that there was an afterthought on the part of the petitioners. The petitioners having failed to comply the provisions of the Act and Rules as mentioned above, are not entitled to any relief in the present writ petition.
13. The petitioners have not disputed as to the calculation of gratuity amount payable to the respondent. The petitioners have also not placed any material on record that the alleged act of the respondent was involved moral turpitude and that act has caused any loss to the Bank. As held by the Hon’ble Supreme Court in Union Bank of India v. C G Ajay Babu, reported in 2018 SCC OnLine SC 962, “It is not for the Bank to decide whether an offence has been committed. It is for the court. Apart from the disciplinary proceedings initiated by the appellant-Bank, the Bank has not set the criminal law in motion either by registering an FIR or by filing a criminal complaint so as to establish that the misconduct leading to dismissal is an offence involving moral turpitude”. The case of the petitioners is that they are entitled to forfeit the amount as per Regulation 46(1) of Indian Bank Officers’ Service Regulations, which they have failed to establish for the above reasons and for the specific reason that provisions of the Act has an overriding effect.
In the result, the writ petition fails and it is accordingly dismissed. The petitioners are directed to pay the gratuity amount as directed by the appellate authority expeditiously.
akd Sd/-
ACTING CHIEF JUSTICE