IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 22ND DAY OF NOVEMBER, 2019 BEFORE THE HON'BLE MR. JUSTICE S.G.PANDIT REGULAR SECOND APPEAL NO.2065 OF 2013 (DEC) BETWEEN:
SRI P RATNAKAR, S/O. LATE P. SADASHIVA RAO, AGED ABOUT 62 YEARS, R/AT. "SAURA NIDHI", H. NO.2-11-862/13, OPP: NODU HOUSE, BEJAI, MANGALORE - 575004. ...APPELLANT (BY SMT. SHEELA KRISHNA, ADVOCATE) AND:
1. THE TRUSTEE, KARNATAKA BANK LTD., STAFF PROVIDENT FUND, KARNATAKA BANK BUILDING, HEAD OFFICE, KODIALBAIL, MANGALORE – 575 003.
2. THE KARNATAKA BANK LTD., REGD. OFFICE, KODIALBAIL, MANGALORE – 575 003, REPRESENTED BY ITS CHAIRMAN. …RESPONDENTS (BY SRI A MADHUSUDHANA RAO, ADVOCATE FOR R1, SRI B.H.RAMAPRASAD, ADVOCATE FOR R2) THIS REGULAR SECOND APPEAL IS FILED UNDER SECTION 100 OF CPC., AGAINST THE JUDGMENT AND DECREE DATED: 02.08.2013 PASSED IN R.A.NO.34/2010 ON THE FILE OF THE II ADDL. DISTRICT JUDGE, D.K. MANGALORE, DISMISSING THE APPEAL AND CONFIRMING THE JUDGMENT AND DECREE DATED: 30.11.2009 PASSED IN O.S.NO.176/2004 ON THE FILE OF THE II ADDL. CIVIL JUDGE (SR.DN) MANGALORE, D.K.
THIS APPEAL COMING ON FOR ADMISSION THIS DAY, THE COURT DELIVERED THE FOLLOWING:-
JUDGMENT This is an appeal under Section 100 of the Code of Civil Procedure assailing the judgment and decree dated 30.11.2009 in O.S. No.176/2004 and judgment dated 02.08.2013 in R.A. No.34/2010 on the file of II Additional District Judge, D.K., Mangaluru.
2. The appellant is plaintiff and respondents are defendants in O.S. No.176/2004. Parties to this appeal would be referred to as they stand before the trial Court.
3. Plaintiff’s suit was for declaration that he is entitled to receive the entire Staff Provident Fund amount from the first defendant trust, free from objections of the second defendant and for consequential directions to render true and correct accounts of Staff Provident Fund amount collections upto date and for a final decree for payment along with interest at the rate of 15% p.a. from 19.08.1994 till payment.
4. Plaintiff was an employee of second respondent Bank. In May, 1988 he was transferred from Dugalgundi branch to the head office at Mangaluru. He was kept under suspension pending domestic enquiry in the year 1988. Enquiry was initiated alleging that the plaintiff had misused his official position and sanctioned loans to fictitious persons and subsidy was misutilized. After holding enquiry the plaintiff was dismissed from service with effect from 19.8.1994. First defendant is the trust formed by the employer of the second defendant for the purpose of collection of Provident Fund contributions both from the employer and the employee and to manage and administer the funds in accordance with the Karnataka Bank Ltd., Staff Provident Fund Rules and Regulations (for short the Rules) therein. The plaintiff by letter dated 12.8.1995 requested the first defendant to settle his provident fund account and to arrange payment. In response the first defendant informed that a cheque dated 21.09.1995 for Rs.76,695/- is drawn in his favour and was sent to Dugalgundi branch with instructions to credit the amount to his SB account at that branch. It is also informed that the employees’ contribution to the Staff Provident Fund with interest was also transferred in accordance with the directions of the management of the second defendant to the SB account of the plaintiff. Later on the plaintiff came to know that out of the total sum of Rs.76,695/- his contribution towards the provident fund which was transferred to his SB account; a sum of Rs.71,927/- was credited to the Sundry Liabilities Account of the second defendant as per instructions from the head office. As the defendants did not pay the provident fund amount to the plaintiff he filed W.P. No.6000/1996 before this Court and this Court dismissed the petition as not maintainable with an observation that the plaintiff could approach Civil Court for proper relief. Thereafter the plaintiff filed the suit against the defendants for the reliefs stated supra.
5. On issuance of suit summons the defendants appeared before the Court and the second defendant filed its written statement contending that the plaintiff is not entitled for the reliefs sought in the suit. It is also stated that the question of accounting does not arise as the relationship between the plaintiff and defendant does not involve such relationship. The claim is barred by limitation. Further it is stated that the plaintiff was dismissed from service by order dated 19.08.1994 for serious misconducts committed by him while working as Manager of the defendant Bank. Plaintiff has caused financial loss to the tune of Rs.1,53,465/- which was proved and established in the departmental enquiry. It is their contention that as per regulation 16 of the Karnataka Bank Limited Staff Provident Fund Regulation, the Bank has recovered the loss caused by the plaintiff from the SB account of the plaintiff in which the provident fund amount was credited. It is further contended that dismissal order of the plaintiff has become final and the same cannot be questioned in this proceedings. The defendant further contended that the plaintiff had given the authority as per his letter dated 30.10.1995 to debit his account and send a Demand Draft.
6. On the basis of the pleading of the parties the trial court framed the following issues:
1. Whether the plaintiff proves that the S.P.F. Amounts due to him was unlawfully appropriated by the 2nd defendant?
2. Whether the 2nd defendant proves that frame of the suit is bad?
3. Whether the 2nd defendant proves that suit is barred by limitation?
4. Whether the 2nd defendant proves that the Provident fund scheme which has been force in the 2nd defendant establishment is not under the provisions of the Employees Provident Fund Act, 1952 ?
5. Whether the plaintiff is entitled for reliefs as prays for ?
6. What Order or decree?
7. The plaintiff examined himself as PW.1 and got marked 16 documents in support of his case. Whereas the defendant examined DW.1, retired Senior Manager of the Bank and also examined DW.2 Manager (Inspection and Audit) and marked EXs.D1 to D80.
8. Based on the material on record the trial Court answered issues No.1, 2, 3 and 5 in the negative and issue No.4 in the affirmative and dismissed the suit. Being aggrieved by the dismissal of the suit the plaintiff preferred Regular Appeal under Section 96 of the Code of Civil Procedure. The appellate Court taking note of the grounds urged by the appellant and after hearing both sides framed the following points for its consideration.
1. Whether the judgment of the trial court is not based on the pleadings, evidence placed before the court and principles of law and needs interference by this court?
2. What order?
9. The first appellate court answered the point in the negative and dismissed the appeal by affirming the judgment and decree of the trial court. Against the dismissal of the suit which was affirmed by the first appellate court the plaintiff is in appeal before this Court.
10. Heard the learned counsels for the parties and perused the material on record.
11. On hearing the learned counsels for the parties and perusal of the material on record, the substantial question of law which falls for consideration in this appeal is:
“as to whether Rule – 16 of the Rules empower the Bank to adjust the employees contribution to the Provident Fund account, towards loss caused to the Bank?”
12. The answer to the above substantial question of law is in the negative for the following reasons:
The counsel for the appellant and counsel for the respondents were heard on the above substantial question of law. The learned counsel for the appellant would submit that the defendants have no authority to recover the employees portion of contribution towards the provident fund account and the adjusting of the employees contribution of the provident fund amount by the defendants are wholly illegal and without authority. The plaintiff had requested the second defendant Bank by letter dated 30.10.1995 to send the provident fund amount of `.76,695/- by Demand Draft to his Mangaluru address, but he had not authorized them to adjust it towards financial loss said to have been caused.
13. Learned counsel for the appellant points out to regulation 16 of the Karnataka Bank Limited Staff Provident Fund Regulation and submits that Bank is empowered to recover only the employer’s contribution towards the provident fund account and not the employees’ contribution towards the Provident Fund Account. Therefore, the defendants could not have adjusted the sum of Rs.71,927/-, the employees’ contribution towards the Provident Fund Account. Thus the learned counsel for the appellant submits that the courts below failed to appreciate the provision of the Karnataka Bank Limited Staff Provident Fund Regulation in its proper perspective, which resulted in dismissal of the suit and confirmation by the First Appellate Court.
14. Per contra, the learned counsel appearing for the defendants submits that the plaintiff was dismissed after holding departmental enquiry where charges were proved against him. The charge against the plaintiff was serious in nature and it was that he misused his official position and has sanctioned loans to fictitious persons and he had also misutilized the subsidy received from the Government. As there was a definite finding in the Departmental Enquiry that the plaintiff has caused loss to the bank, the bank without having any other alternative adjusted the amount which was transferred from Provident Fund Account to his Savings Bank Account. It is his submission that the Bank could recover the loss caused to the bank by the plaintiff. As the amount was lying in SB account after transfer from the PF account, he submits that it seizes to have the characteristics of PF account. Thus he prays for dismissal of the appeal.
15. There is no dispute that the plaintiff was an employee of the second defendant bank and he was dismissed by order dated 19.8.1994 after holding Departmental Enquiry wherein charges were proved against him and the dismissal order has become final. During the course of his employment he was having PF account and to the said account the employer was also contributing his contribution apart from employer’s contribution. As on the date of dismissal there was an amount of Rs.76,695/- apart from employers contribution. The plaintiff by his letter dated 30.10.1995 EX.P4 had requested the bank to send a sum of Rs.76,695/- by way of Demand Draft. The contents of EX.P4, letter dated 30.10.1995 reads as follows:
“ I have been informed by the Trustees Staff Provident Fund, Mangalore that my SB A/c 1103 with you has been credited with a sum of Rs.76,695-00. The copy of the letter is enclosed herewith for your verification.
I request you to debit my SB A/c 1103 with you a sum of Rs.76,695/- (Rupees Seventy Six Thousand Six Hundred Ninety Five Only) and send the proceeds by Demand Draft on Mangalore in my favour to my above said address immediately. I don’t have any loose cheque provided to my above said SB A/c 1103.”
16. The trial court misread EX.P4 letter dated 30.10.1995 and construed that it is an authorization given by the plaintiff to the defendant Bank to debit the PF amount to his SB account and proceeded to dismiss the suit. When the plaintiff requested the defendants to send the PF amount through Demand Draft the Bank could not have remitted the same to his SB Account and thereafter credit it to its sundry accounts to adjust it towards the loss caused to the Bank by the plaintiff. The bank had transferred the employees’ contribution of PF amount to the SB account without specific authorization from the employee. When the PF amount is transferred by the Bank on its own to the SB account of the plaintiff it won’t automatically seized to PF amount. Regulation 16 of the Rules reads as follows:
“ RIGHTS OVER BANK’S CONTRIBUTION:
16. The Bank shall not be entitled to recover any sum whatever from the Fund, save in cases where a member is dismissed for misconduct causing financial loss to the bank, and in such cases the Bank shall be entitled to withdraw from the fund the Bank’s contribution to the credit of the said Member and the interest credited in respect of such contributions, provided that the amount withdrawn shall not exceed the financial loss.”
17. A careful reading of the above Rule would mean that the Bank is not empowered to adjust any amount from out of the contribution by the employee towards the fund against any loss caused by such an employee. But could withdraw from the fund the employers contribution to the employees Provident Fund account. The above regulation would not permit the Bank to withdraw the employees contribution to the fund. Therefore, the recovery of employees’ contribution from the Provident Fund is wholly illegal and without jurisdiction. The bank could not have credited the Provident Fund amount to the SB account of the plaintiff without his consent and thereafter the Bank could not have adjusted the amount from plaintiff’s SB account to Bank’s sundry account. Thus, the question of law framed above is answered in the negative and the suit is partly allowed. The defendants are directed to pay a sum of Rs.71,927/- contribution of the employee to the PF account with interest at the rate of 7.5% from the date of institution of the suit till payment. Accordingly, the appeal is partly allowed.
Sd/- JUDGE ykl