UNION BANK OF INDIA vs THE APPELLATE AUTHORITY UNDER THE PAYMENT OF GRATUITY ACT, 1972 AND ORS.
- Court
- Calcutta High Court
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IN THE HIGH COURT AT CALCUTTA
Constitutional Writ Jurisdiction
Appellate Side
Present:
The Hon’ble Justice ShampaDutt (Paul)
WPA 19728 of 2024
Union Bank of India
Vs
The Appellate Authority Under the Payment of Gratuity Act, 1972 &
Ors.
For the Petitioner : Mr. Ranjay De, Sr. Adv.
Mr. Basabjit Banerjee,
Mr. Adityajit Abel Bose.
For the Respondent no.3: Mr. Pratik Majumder,
Mr. Srehasish Dey,
Mr. Shantanu Chakraborty.
Judgment reserved on : 16.04.2026
Judgment delivered on : 14.05.2026
SHAMPA DUTT (PAUL), J. :
1. The writ application has been preferred praying for direction upon the
respondent no.1 and 2 to set aside and cancel the impugned orders dated
13.06.2023, passed by the Controlling Authority order dated 27.03.2024
passed by the Appellate Authority under the Payment of Gratuity Act.
2. The petitioners case in short is that on 17.08.1987, Sri Narendra Singh,
the Private Respondent joined the petitioner bank and was lastly promoted
to the post of Chief Manager. He was served with Articles of Charges dated
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01.03.2018 for causing irregularities while granting loans when he was
posted as Branch Manager, Agra Development Authority Branch, Agra
Region. On 20.03.2018, the Private Respondent submitted his reply to the
Articles of Charges. During 23.04.2018 to 13.07.2018, an enquiry was held
in connection with the charges levelled against the Private Respondent. He
participated in the said enquiry. Thereafter, the Report was submitted by
the Enquiry Officer.
3. After observing due process of law, the Disciplinary Authority by an order
dated 22.01.2019 imposed the punishment of dismissal from services of
the bank. The Private Respondent preferred an Appeal against the said
order of punishment before the Appellate Authority of the bank but the
Appellate Authority by an order dated 06.09.2019 did not interfere with the
punishment imposed. On 20.04.2022, the petitioner bank was served with
FORM-O issued by the Controlling Authority under the Payment of
Gratuity Act, 1972 along with the FORM-N dated 24.12.2021 filed by the
Private Respondent.
4. The Private Respondent was served with a notice dated 21.11.2022 for
forfeiture of gratuity issued by the competent authority of the
petitioner bank. Since the Private Respondent never responded to the said
notice of forfeiture dated 13.02.2023, the petitioner bank intimated him
about the decision regarding forfeiture of gratuity. The Controlling
Authority being the Respondent No. 2 by an order dated 13.06.2023
directed the petitioner bank to pay a sum of Rs. 18,48,435/- along with
10% simple interest from 25.01.2019 till the date of payment. On
09.08.2023, the petitioner bank deposited a sum of Rs. 26,87,320.64 with
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the Controlling Authority being the Respondent No. 2 to prefer an Appeal
against the said order dated 13.06.2023.Thereafter, the Appeal was filed
within the statutory time limit.
5. A notice dated 19.09.2023 was served upon the parties by the Appellate
Authority under the Payment of Gratuity Act, 1972, being Respondent No.
1. On 12.10.2023, the Private Respondent submitted his reply against the
said Appeal. By an Order dated 27.03.2024 the Appellate Authority being
Respondent No. 1 confirmed the Order passed by the Controlling Authority
rejecting the Appeal filed by the Petitioner Bank.
6. Hence, the writ application.
7. It is the further case of the petitioner that when the respondent no.3
employee, was posted at Development Authority Branch, Agra, the
following grave irregularities of the respondent no.3 came to light during
the special audit of the said Branch. In the special audit, the following
irregularities were noticed:-
(a) Approved various housing loans for purchase of houses
without ensuring that approval for construction of those
houses have been obtained from the Development Authorities.
(b) He also allowed huge Overdrafts beyond his delegation
and without obtaining prior approval from the Regional Office,
Agra.
(c) He did not accord any importance to the quality of the
asset.
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(d) A list of accounts was sent to the Regional Office of the
Petitioner Bank for re-phasement without ascribing any
reason/rationale for such request.
(e) He did not ensure timely submission of the COR for the
irregularities pointed out during the course of Regular Audit.
(f) He never responded in connection with the query raised by
the Regional Office. )
8. Accordingly, by a Memorandum No. CO: RD: 1706: 2017 dated 06.05.2017,
he was served with a Show-Cause Notice detailing the irregularity
committed by him by grossly violating the rules and procedure laid down
by the Petitioner Bank for processing/sanction/disbursing loans to the
borrowers.
9. Chargesheet was served upon the petitioner on being not satisfied with
the reply to the showcause and subsequently a domestic enquiry was
conducted by the Enquiry Officer on diverse dates between 23.04.2018
to 13.07.2018. During the course of Enquiry, the Respondent No. 3
duly participated. Admittedly, the said Enquiry was conducted in
strict adherence to the Rules of Principles of Natural Justice by
affording him an opportunity to be represented through a
representative of his choice. Secondly, he was provided with all
the documents relied on by the Petitioner Bank. Thirdly, he not
only participated in the Domestic Enquiry along with his
representative along with his Assisting Officer (in short 'A.O.) but
also availed of the fullest opportunity to cross-examine the
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management's witness. Fourthly, in spite of affording an opportunity
to cross-examine the management witnesses', neither the Private
Respondent nor the A.O. availed of the opportunity and lastly, he only
placed his document in support of his defense but did not produce any
witness in conducting his defense. Accordingly, the Enquiry Officer
closed the Enquiry on 13.07.2018.
10. The petitioner further states that after completion of the enquiry, the
Enquiry Officer submitted his Report along with other connected
papers vide letter dated 15.10.2018, holding the Respondent No. 3
guilty of the charges leveled against him in the said Articles of
Charges. The Report of the Enquiry Officer is of about 400 pages. The
same is based on materials on records both, oral and documentary
and he has also assigned reasons for the conclusions drawn in
support thereof.
11. The copy of the Enquiry was duly served upon the Private Respondent
and thereafter by a Memorandum No. CO: ERD: DA:412:2019 dated
22.01.2019 he was awarded with the punishment of dismissal from
service for sanctioning approximately 280 Loans aggregating to
Rs. 61.51. crores under various categories without following the
guidelines/instructions issued by the Petitioner Bank from time
to time.
12. An appeal by the private respondent was dismissed by the Appellate
Authority on 06.09.2019.A prayer for review was also rejected.
13. It is the case of the petitioner that Regulation 3 of the Schedule- 'A' of
the Union Bank of India (Employees) Gratuity Fund Rules clearly
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provides the Authority of the Petitioner Bank to forfeit the gratuity of
an employee whose service has been dismissed on the ground of
misconduct causing financial loss to the Bank. The amount of
forfeiture is restricted to the financial loss caused to the Bank.
14. It is further stated that after disposal of the Review Petition filed by the
Respondent No. 3, he was served with a Notice for forfeiture of gratuity
dated 21.11.2022, but in spite of receiving the same, he did not
submit his reply. Ultimately, by an order dated 13.02.2023, the
management of the Petitioner Bank intimated the Respondent No. 3
about their decision regarding forfeiture of gratuity.
15. The petitioners states that surprisingly enough the Respondent No. 3
before disposal of the review application, in terms of the order dated
01.08.2022 filed 'FORM-N' under the Payment of Gratuity Act, 1972,
before the Respondent No. 2 and the case was registered as
PG/30/2022/ALCR. The said Application was forwarded to the
Petitioner Bank vide 'FORM-O' dated 20.04.2022.
16. The petitioner filed his written statement before the said Controlling
Authority and the Controlling Authority by an order dated 13.06.2023
directed payment of gratuity along with a simple interest in favour of
the private respondent.
17. The petitioner then preferred an appeal before the Appellate Authority
who upheld the order of the Controlling Authority. The petitioners
case is that the prayer for gratuity before the respondent no.2 was
made after a delay of about 2 years 11 months from the date of
dismissal.
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18. The petitioners states that the Controlling Authority has passed the
order without considering Regulation 3 of Schedule-„A‟ of the Union
Bank of India (Employees‟) Gratuity Fund Rules. It is further stated
that the Authority permitting such claim after such a long delay is also
against the principle of natural justice.
19. It is the specific case of the petitioner that the Controlling Authority
has misdirected itself in law to the effect that the Payment of Gratuity
Act of 1972 can govern the conditions concerning Payment of Gratuity
and not otherwise. It cannot control and provide with respect to the
petitioner Bank‟s right to forfeit the gratuity to the extent of the
pecuniary loss suffered in terms of the Regulations having statutory
force. It is further stated that the impugned order is a perverse one,
since the Respondent No.2 did not consider the materials on record in
as much as, the order of forfeiture dated 21.11.2022, clearly states
(specifics) the financial loss suffered by the petitioner Bank to the tune
of Rs.1453.01 lakhs which is in any way much more than
Rs.18,48,435 (Rupees Eighteen Lakhs Forty Eight Thousand Four
Hundred Thirty Five) only, the amount of gratuity to which the
Respondent No.3 was entitled to in an ideal situation.
20. It is further stated that the Controlling Authority has wrongly observed
that in the NPA account, the outstanding amount either can be
recovered if sincere efforts are made or sometime the defaulting parties
may repay themselves if their financial conditions changed.
21. It is also stated that the conclusion drawn by the Respondent No.2
regarding non-suffering of financial loss by the petitioner Bank is not
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only beyond its jurisdiction but also suffers from utter perversity in as
much as non-application of mind.
22. The petitioner further states that the decision of the Respondent No.2
regarding absence of correct quantification of financial loss is of no
consequence since whatever may be the amount or loss suffered by the
Bank, less or more, is always greater than Rs.18,48,435/- (Rupees
Eighteen Lakhs Forty Eight Thousand Four Hundred Thirty Five) only
the amount of gratuity receivable by the private respondent.
23. The petitioner submits that during of the course of hearing of the
appeal, the Petitioner Bank submitted "ACCOUNT WISE DETAILS
FROM WHICH BANK HAS INCURRED FINANCIAL LOSS" in connection
with the loan sanctioned by the Respondent No. 3 and the same is
much higher than that of Rs. 18,48,435/- (Rupees eighteen lakhs forty
eight thousand four hundred thirty five) only, the amount of gratuity
which the said Respondent was entitled to.
24. Parties have filed their written notes and argued relying upon the
judgments in their favour. The petitioners submits that on 01.03.2018,
the Petitioner Bank served him Articles of Charges) based on the said
show cause notice dated 06.05.2017 in terms of Regulation 3 of Union
Bank of India Officer Employees (Conduct) Regulations, 1976 which
are to the following effect:-
“Failure to take all possible steps to ensure & protect the interest
of the Bank.
Failure to discharge his duties with utmost devotion and diligence.
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Failure to discharge his duties with utmost honesty and integrity.
Acting otherwise than in his best judgement in the performance of
his official duties."
25. The Private Respondent submitted his reply on 20.03.2018.
26. The petitioner bank being dissatisfied with the reply submitted by the
Private Respondent decided to hold an enquiry. Accordingly, from
23.04.2018 to 13.07.2018, an enquiry was held in connection with the
charges leveled against the Private Respondent. He participated in the
said enquiry. Thereafter, the Report was submitted by the Enquiry
Officer.
27. The Disciplinary Authority concurred with the finding of the Enquiry
Officer and as such after observing due process of law, the Disciplinary
Authority by an order dated 22.01.2019 imposed the punishment of
“dismissal from services” of the petitioner bank.
28. The Private Respondent never challenged the said order of dismissal
dated 22.01.2019 and filed an application (FORM-N) claiming gratuity
before the Respondent No. 2.
29. The Controlling Authority then directed for payment of gratuity in
favour of the respondent/workman. The said order was upheld by the
Appellate Authority.
30. Mr. De for the petitioner submits that Clause 3 of Annexure A of
Union Bank of India employees Gratuity Fund Rules empowers the
bank to forfeit the atuity to the extent of financial loss suffered by it.
The material portion is reproduced herein:-
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"3. In case of termination of service of the Member on
account of misconduct, Gratuity payable either under Clause
1 or Clause 2 above shall not be forfeited, except where such
misconduct causes financial loss to the Bank (of which and
of the amount of which the Bank shall be the sole judge and
its decision final) and in that case the forfeiture of the
Gratuity shall be to the extent of the financial loss only…..”
31. In support of his said argument, Mr. De has relied upon the judgment of
the Supreme Court Canara Bank & Another Vs. Lalit Popli (Dead)
Through Legal Representatives reported in (2018) 11 SCC 87 AT
PARAGRAPHS 13 AND 14 .
32. Learned Counsel further submits that the judgment in Laxman Popatbhai
Solanki Vs. State of Gujarat and Anr, reported in (1976) 2 LLN 539 ,
relied upon by the Appellate Authority is not applicable to the present case,
as in the said case no opportunity of hearing was given to the employee
concerned.
33. The petitioner relies upon Para 12, 13 and 14 in Canara Bank & Another
Vs. LalitPopli (Dead)
(Supra).
“12. Rule 3(4) of Chapter VIII of the General Conduct Rules
states that "an employee who is dismissed for misconduct shall
not be entitled to gratuity". Rule 12 of the Gratuity Rules reads
thus:
"12. Notwithstanding anything contained in the preceding clauses
where an employee has been dismissed for misconduct and such
misconduct has caused financial loss to the Bank, he shall not be
eligible to receive the gratuity to the extent of the financial loss
caused to the Bank."
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Likewise, Clause 19 of the Provident Fund Regulations
reads thus:
"19. If a member causes financial loss to the Bank by misconduct,
fraud, gross negligence or other conduct of like nature and is
dismissed from the service of the Bank or is permitted to leave
the service of the Bank in consequence of such misconduct, fraud,
gross negligence or other like conduct, the amount of such
financial loss sustained by the Bank shall be deducted by the
Trustees from the Bank's contribution out of the amount due to
the member and be paid to the Bank."
13. Special Rules relating to gratuity, mentioned supra, makes it
amply clear that the employee who has been dismissed for his
misconduct and if such misconduct has caused financial loss to
the Bank, he shall not be eligible to receive the gratuity to the
extent of financial loss caused to the Bank. So also, Clause 19 of
the Provident Fund Regulations permits the Bank to deduct the
payment of provident fund to the extent of financial loss caused
to the Bank from the Bank's contribution. Both the
aforementioned clauses are plain and simple. They are
unambiguous, Since Rule 12 of the Gratuity Rules and Clause 19
of the Provident Fund Regulations permit the Bank to withhold
gratuity and deduct the Bank's contribution towards provident
fund and in such matters, the Bank was justified in recovering
the amount of financial loss sustained by it, which was caused
by the respondent, from out of the gratuity and also the
employer's contribution towards provident fund payable to the
respondent/employee.
14. Thus, in our considered opinion, the High Court was not
justified in setting aside the decision of the Bank to recover the
amount of loss sustained by it from the respondent, particularly
when the Bank is empowered to do so, as discussed supra”.
34. The petitioner has further relied upon the judgments in:-
i. (2020) 18 SCC 71 in Chairman-Cum-Managing Director, Mahanadi
Coalfields Limited Versus. Rabindranath Choubey,
ii. (2004) 12 SCC 579 in Principal Secretary, Govt.Of A.P. Vs. M.
Adinarayana ,
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“26. In our opinion, judicial review cannot extend to the
examination of the correctness of the charges as it is not an
appeal but only a review of the manner in which the decision was
made. We have, therefore, no hesitation in Setting aside the order
of the Andhra Pradesh Administrative Tribunal and the judgment
of the Division Bench of the High Court for reasons stated (supra).
The order passed by the Government removing the respondent
from service is in order and, therefore, the appeal filed by the
appellant State stands allowed. Further, there will be no order as
to costs.”
iii. (2025) LLR 1317 in Sri Rajan Bandyopadhyay @ Ranjan
Banerjee Vs. The Bank of Baroda & Ors . And
iv. (2025) SCC Online 9649 in MSTC Limited Vs. Malay Sengupta
and Others by a Division Bench of the Calcutta High Court.
35. The Respondent no.3 has argued and in the written notes has stated
that show cause, charge-sheet was duly issued and served upon him
but the charge-sheet did not quantify the loss which the bank had to
suffer for his action.
36. The Respondent no.3, further submits that even though no amount was
quantified, and punishment of dismissal from service was issued against
him, no gratuity was paid. The respondent then made an application before
the Controlling Authority on 24.12.2021.
37. The Respondent no.3 states that it is only on 21.11.2022 that the
petitioner/company issued a notice for forfeiture for gratuity after almost
4 years of passing the order of dismissal from service.
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38. The petitioner/company forfeited the respondent no.3‟s gratuity by an
order dated 13.02.2023. The Respondent no.3 argues that Section 14
contemplates an overriding clause and leaves no room for any doubt that a
superior status has been vested in the provisions of the Gratuity Act vis-à-
vis any other enactment (including any other instrument or contract)
inconsistent therewith.
39. The judgment in 2023 SCC Online SC 1452 (Jyotirmay Ray -v/s- The
Field 2023 Manager, Punjab National bank & Ors) – Paragraphs 18-20,
has been relied upon.
40. The Respondent no.3 next relies upon the Sec 4(6) of the Payment of
Gratuity Act. It is stated that in the present case the loss caused to the
bank was never quantified neither at the time of issuance of show cause
nor at the time of issuing the charge sheet and the respondent no. 3 was
never given any opportunity to respond to the allegation of causing loss.
41. Moreover the notice forfeiting gratuity quantifying the loss dated 21st
November, 2022 was issued after a period of almost 5 years from the date
of issuance of charge sheet and after a period of almost 4 years from the
date of awarding the penalty of dismissal from service.
42. It was only when the respondent no.3 filed the application before the
Controlling Authority for release of gratuity on 24th December, 2021 and
after the bank participated in such proceeding and filed their Written
Statement, that they chose to issue the notice of forfeiture of gratuity on
21st November, 2022 which is nothing but an afterthought and to cover
up/justify their stand before the Controlling Authority.
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43. The respondent no. 3 submits that in the case of Y.K. Singla v. Punjab
National Bank, (2013) 3 SCC 472, while considering the issue of interest
on the late payment of gratuity to a retired employee of Punjab National
Bank held that the payment of Gratuity Act will override the Punjab
National Bank (Employees') Pension Regulations, 1995 (for short "1995
Pension Regulations"). While dealing with the issue of recovery from
gratuity under Regulation 46 or withholding of pension under Regulation
46(2) of the said Regulations, the Court in paragraph 22, after referring to
Section 14 of the Gratuity Act, held:-
"22. In order to determine which of the two provisions (the
Gratuity Act, or the 1995 Regulations) would be applicable for
determining the claim of the appellant, it is also essential to refer
to Section 14 of the Gratuity Act, which is being extracted
hereunder:-
14. Act to override other enactments, etc. The provisions of this Act
or any rule made thereunder shall have effect notwithstanding
anything inconsistent therewith contained in any enactment other
than this Act or in any instrument or contract having effect by
virtue of any enactment other than this Act."
A perusal of Section 14 leaves no room for any doubt that a
Superior status has been vested in the provisions of the Gratuity
Act vis-à-vis any other enactment (including any other instrument
or contract) inconsistent therewith. Therefore, insofar as the
entitlement of an employee to gratuity is concerned, it is apparent
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that in cases where gratuity of an employee is not regulated
under the provisions of the Gratuity Act, the legislature having
vested superiority to the provisions of the Gratuity Act over all
other provisions/enactments (including any instrument or contract
having the force of law), the provisions of the Gratuity Act cannot
be ignored. The term "instrument" and the phrase "instrument or
contract having the force of law" shall most definitely be deemed
to include the 1995 Regulations, which regulate the payment of
gratuity to the appellant."
44. Thus, it appears in the present case, it is the case of the petitioner herein
that as per the regulation of the Bank, it is within their rights to forfeiture
the gratuity of the respondent no.3 herein to the extent of the loss suffered
by the petitioner/company. On the other hand, it is the case of the
respondent no.3 that there is no quantification of loss stated in the
judgment and mentioning the quantum of loss only in the show-cause
notice for forfeiture after the enquiry proceedings shows that the amount
quantified is clearly an after thought.
45. Secondly, the respondent no.3 submits that there has been a delay of
almost 5 years in forfeiting the gratuity proceedings after the conclusion of
the enquiry proceedings.
46. It appears that even the forfeiture was an after thought and it was done
only after the petitioner made the application before the Controlling
Authority for as gratuity.
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47. The petitioner‟s contention is that it is only in August, 2022 that a review
application of the Respondent no.3 was disposed of and subsequently
considering the process involved the forfeiture was made at the earliest.
48. In the present case, the petitioner/company has held an enquiry
proceeding and permitted the respondent no. 3 to participate in the
disciplinary proceedings and said order of dismissal has not been
challenged by the Respondent no.3 before any Court of Law.
49. In WPA 10679 of 2025, the Insitution of Engineers (India) Vs. Union
of India , this Court has held:-
“39. In The State of Rajasthan & Ors. Vs Heem Singh, in Civil
Appeal No. 3340 of 2020 (arising out of SLP (C) No. 30763 of
2019) , decided on October 29, 2020, wherein the Supreme Court
in Para 13,33 held:-
"13. The standard of standard of proof in disciplinary
proceedings is different from that in a criminal trial. In Suresh
Pathrella v. Oriental Bank of Commerce4 , a two judge
Bench of this Court differentiated between the standard of proof
in disciplinary proceedings and criminal trials in the following
terms:
"...the yardstick and standard of proof in a criminal case is
different from the disciplinary proceeding. While the standard of
proof in a criminal case is a proof beyond all reasonable doubt,
the proof in a departmental proceeding is preponderance of
probabilities."
This standard is reiterated by another two-Judge Bench of this
Court in Samar Bahadur Singh v. State of U.P .:
"Acquittal in the criminal case shall have no bearing or
relevance to the facts of the departmental proceedings as the
standard of proof in both the cases are totally different. In a
criminal case, the prosecution has to prove the criminal case
beyond all reasonable doubt whereas in a departmental
proceedings, the department has to prove only preponderance
of probabilities."
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33. In exercising judicial review in disciplinary matters, there
are two ends of the spectrum. The first embodies a rule of
restraint. The second defines when interference is permissible.
The rule of restraint constricts the ambit of judicial review. This
is for a valid reason. The determination of whether a
misconduct has been committed lies primarily within the
domain of the disciplinary authority. The judge does not
assume the mantle of the disciplinary authority. Nor does the
judge wear the hat of an employer. Deference to a finding of
fact by the disciplinary authority is a recognition of the idea
that it is the employer who is responsible for the efficient
conduct of their service. Disciplinary enquiries have to abide by
the rules of natural justice. But they are not governed by strict
rules of evidence which apply to judicial proceedings. The
standard of proof is hence not the strict standard which
governs a criminal trial, of proof beyond reasonable doubt, but
a civil standard governed by a preponderance of probabilities.
Within the rule of preponderance, there are varying approaches
based on context and subject. The first end of the spectrum
is founded on deference and autonomy deference to the
position of the disciplinary authority as a fact finding
authority and autonomy of the employer in maintaining
discipline and efficiency of the service. At the other end
of the spectrum is the principle that the court has the
jurisdiction to interfere when the findings in the enquiry
are based on no evidence or when they suffer from
perversity. A failure to consider vital evidence is an incident of
what the law regards as a perverse determination of fact.
Proportionality is an entrenched feature of our jurisprudence.
Service jurisprudence has recognized it for long years in
allowing for the authority of the court to interfere when the
finding or the penalty are disproportionate to the weight of the
evidence or misconduct. Judicial craft lies in maintaining a
steady sail between the banks of these two shores which
have been termed as the two ends of the spectrum. Judges
do not rest with a mere recitation of the hands-off mantra when
they exercise judicial review. To determine whether the finding
in a disciplinary enquiry is based on some evidence an initial or
threshold level of scrutiny is undertaken. That is to satisfy
the conscience of the court that there is some evidence to
support the charge of misconduct and to guard against
perversity But this does not allow the court to re-
appreciate evidentiary findings in a disciplinary enquiry or
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to substitute a view which appears to the judge to be more
appropriate. To do so would offend the first principle which has
been outlined above. The ultimate guide is the exercise of robust
common sense without which the judges' craft is in vain."
50. In the present case, admittedly, no appeal has been preferred by the
private respondent against the finding of the disciplinary authority nor has
he approached any other forum against the said order finding him guilty
and imposing penalty.
51. The disciplinary proceeding conducted and penalty of dismissal by the
petitioner, has not been challenged till date by the respondent no. 3. But
both the controlling authority and more so the appellate authority have
taken into consideration the proceeding against the respondent no. 6, while
passing the impugned orders.
52. The controlling authority in its order:-
“ 2. Whether the Opponent Bank has quantified financial loss
correctly?
The Opponent alleged that the applicant was posted as Branch
Head at Agra Development Authority Branch and during a
small period of 18 months certain lapses were noticed in
various accounts. Disciplinary proceeding was initiated against
the applicant. On the basis of inquiry proceedings. Disciplinary
Authority imposed the penalty of "Dismissal from the services of
the Bank as specified in Regulation 4(j) of Union Bank of India
officer Employees' (Discipline & Appeal) Regulation, 1976' be
and is hereby imposed of Shri Narendra Singh."
The applicant preferred an appeal before Appellate Authority
against the order of dismissal but his appeal was rejected.
The Opponent submitted that the applicant has cause financial
loss of Rs.1453.01 lakh, but full details of the such loss were
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not disclosed. However the opponent furnished the details of
few loan account, amount sanctioned and net loss. While going
through the details of such account it is observed that 280
loans were sanctioned of 61.51 crore by the applicant during
the tenure of 18 months. Therefore the amount of alleged loss is
less than the amount sanction as a loan. The accounts were
turned in NPA account. The amount which is outstanding could
not be recovered from such parties to whom the loan were given
have been declared as LOSS. If the collateral security is
available the due amount can still be recovered from the
defaulting parties. Moreover how much and how many efforts
were made by the opponent bank was not disclosed before the
amount of NPA was declared as financial loss. If the
outstanding amount is still recoverable, how it can be
considered as a financial loss to the Opponent bank. The
opponent mentioned 'doubtful' against many accounts while
relating to the financial loss to the bank.
When it is doubtful loss how the amount of such account can be
considered to have been caused as financial loss by the
applicant.
In the NPA account, the outstanding amount either can be
recovered if sincere efforts are made or sometime the defaulting
parties may repay themselves if their financial conditions
changed.
In such situation the amount which is outstanding in the loan
account cannot be said financial loss to the opponent bank.
The 'financial loss' should be actual and permanent before it
attracts forfeiture of the part or whole amount of gratuity.
In view of the above, I am of the view that the opponent has not
quantified financial loss correctly.”
53. The authority further held:-
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“………In the matter of financial loss as discussed above it
should be caused at the time of termination of service i.e. on
24.01.2019. But the notice for proposed forfeiture was given on
21.11.2022 after more than two and half years creates doubt
and confusion about the actual financial loss caused by the
applicant.
Moreover, a show cause for such proposed forfeiture must be
given to the applicant within reasonable period from the date of
his termination. The Opponent failed to show any reasons for
such inordinate delay and that too deposit the amount before
the Controlling Authority in case they felt any dispute in the
matter of payment of gratuity.
In this case the opponent issued notice for proposed forfeiture of
the gratuity followed by order forfeiting the entire amount of
gratuity after the termination of service of the applicant. Thus
such action is contrary to provisions contained in the Payment
of Gratuity Act, 1972……………”
54. The appellate authority held:-
“…… In the present case, the Controlling Authority has gone
through in detail and has very categorically held as under:
(i) The claim has been made within in time. The matter of
delay has already been decided by the Controlling
Authority. The Appellate Authority normally should not
interfere with his decision in this regard. The relevant
citation is as under:
"The appellate authority should not interfere with the
discretionary powers exercised by the controlling authority in
condoning the delay in presenting the application. [Ramjilal
Chimanlal Sharma V. Elphinstone Spg. & Wvg. Mill Co. Ltd.
1984 Lab. I.C. 1703(Bom.)]."
(ii) The Controlling Authority has also held that the financial
loss has not been correctly quantified. He has further
stated that service of the respondent was dismissed on
21
24/01/2019 and show cause for forfeiture was issued
on 21/11/2022 and no reasons have been given for such
delay. It is also observed that the notice was sent after
employee filed the claim in Form N before the Controlling
Authority.
The Bank has also cited its regulation called Union Bank of
India Officer Employees (Discipline & Appeal) Regulation 1976
having statutorily force.
In this regard, it is observed that as far the Payment of Gratuity
Act, 1972 is concerned, the provisions of this Act shall have an
overriding effect and the regulations of the Bank will not
supersede the provisions of this Act. The relevant Section 14 of
this Act makes it very clear legally which reads as under:
"The provisions of this Act or any rule made thereunder shall
have effect notwithstanding anything inconsistent therewith
contained in any enactment other than this Act or in any
instrument or contract having effect by virtue of any enactment
other than this Act".
The management has not answered the legal situation as
stated by the respondent in Gujarat High Court case (Laxman
Papatbhai Solanki-vrs-State of Gujarat).
FINDINGS
In these circumstances, I do not find any legal infirmity in the
order dated 13.06.2023 of the Controlling Authority & Asstt.
Labour Commissioner (Central), Raniganj at Durgapur in case
No. 48/2(30)/2022-ALCR and uphold his order. However, the
orders to pay interest shall be restricted from the date of filing
Form "N" till the amount is deposited with the Appropriate
Authority.”
55. Section 4(6) of the payment of gratuity act lays down:-
“4(6)Notwithstanding anything contained in sub-section (1),-
22
(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 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 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.”
56. The said provision provides for forfeiture of gratuity on certain grounds,
one of which being “negligence causing any damage or loss to property
belonging to the employer”. The amount of gratuity to be forfeited is to be to
the extent of damage or loss so caused. In the present case admittedly
neither in the show cause nor in the charge sheet nor any where in the
enquiry report or the order of dismissal, the amount of loss has been
quantified though it is mandatory that such loss is quantified in the
enquiry proceeding itself.
57. In the present case, admittedly the loss was quantified in the show cause
letter issued for forfeiting the gratuity of the workman/respondent no. 3
after almost 4 years, when the workman on filing form „N‟ approached the
controlling authority. Such conduct on the part of the petitioner prima
facie proves that same is an afterthought.
58. Quantifying the loss at the stage of forfeiture of gratuity is not in
accordance with law as the said amount quantifying the loss was not part
of the enquiry proceeding including the chargesheet and the show cause.
As the said loss as quantified was not put to the workman during the
23
enquiry proceeding nor the disciplinary proceedings, he was not in a
position to counter the same.
59. Even though the enquiry report as submitted by the petitioner runs into
400 pages, the same appears to be more of quantity than quality evidence
against the workman.
60. Admittedly, no loss was quantified either in the show cause or charge sheet
or during the enquiry proceeding till the notice for forfeiture of gratuity
after more than four years.
61. The said conduct of the petitioner is clearly an abuse of process of law and
against the principle of natural justice and clearly shows that the entire
enquiry proceedings has thus not been conducted in accordance with law.
62. This Court further finds that in the charge framed against the workman the
petitioner has also claimed that huge cash deposits not commensurate
with the employees known source of income has been observed.
63. From the details provided in the article of charge, the amount as noted is
“meagre” amount and this observation of the petitioner in the article of
charge again prima facie proves that the proceeding on such basis, is
entirely malafide.
64. Section 5 of the payment of gratuity act lays down:-
“5. Power to exempt.- [(1)] The appropriate Government
may, by notification, and subject to such conditions as may
be specified in the notification, exempt any establishment,
factory, mine, oilfield, plantation, port, railway company or
shop to which this Act applies from the operation of the
provisions of this Act if, in the opinion of the appropriate
Government, the employees in such establishment, factory,
mine, oilfield, plantation, port, railway company or shop are
in receipt of gratuity or pensionary benefits not less
favourable than the benefits conferred under this Act.
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(2)[The appropriate Government may, by notification and
subject to such conditions as may be specified in the
notification, exempt any employee or class of employees
employed in any establishment, factory, mine, oilfield,
plantation, port, railway company or shop to which this Act
applies from the operation of the provisions of this Act, if, in
the opinion of the appropriate Government, such employee or
class of employees are in receipt of gratuity or pensionary
benefits not less favourable than the benefits conferred under
this Act.]
(3)[A notification issued under sub-section (1) or sub-section
(2) may be issued retrospectively a date not earlier than the
date of commencement of this Act, but no such notification
shall be issued so as to prejudicially affect the interests of
any person.]”
65. Admittedly the petitioner herein does not enjoy any exemption as
required under Section 5 of the Payment of Gratuity Act and as such
the petitioner cannot claim that the bank regulations shall prevail over the
payment of gratuity act.
66. In UCO Bank & Ors. vs Nityananda Paul, in MAT 1298 of 2012 with
CAN 7976 of 2012, decided on 29 September, 2016, the Calcutta High
Court held:-
“13. When there is no exemption accorded, any provision
of law which is inconsistent with the Payment of Gratuity
Act cannot be acted upon in forfeiting the gratuity as that
is clearly prohibited under Section 14 of the Act. The
provisions of the Act have an overriding effect over other
enactments which are inconsistent with the Act. In Anju
Mathur's case (supra), the Full Bench of the Punjab and
Haryana High Court was not required to consider
whether the Payment of Gratuity Act would take
precedence over the UCO Bank (Officers') Service
Regulations, 1979. It proceeded on the basis that the
Service Regulations would govern the payment of gratuity
as the applicability of the Service Regulations was not in
dispute. In the present case a specific contention has
been raised about the non-applicability of the Service
Regulations in so far as the payment of gratuity is
25
concerned. Therefore this judgement does not assist the
Bank.
16. The Payment of Gratuity Act does not have any
provision for establishing a trust for disbursement of
gratuity or for empowering the trustees of such a trust to
decide whether gratuity should be paid to an employee.
Sub-section (6) of Section 4 starts with a non-obstante
clause and provides that gratuity must be paid to an
employee whose services have been terminated.
However, if the termination was for any act, wilful
omission or negligence which caused any damage or loss
or destruction of the property belonging to the employer,
the gratuity may be forfeited. The forfeiture of gratuity is
permissible only to the extent of the damage or loss so
caused. Thus the employer is not bound to forfeit
the gratuity in every case of loss or damage. In the
present case, the charge sheet issued to the
employee does not indicate or quantify the loss
allegedly caused to the Bank. The disciplinary
enquiry was conducted on the basis of certain acts
and omissions on the part of the employee which
the Bank found were deliberate. The acts
complained of were firstly, that he permitted
customers to draw excess beyond the sanctioned limit
and the power vested in the employee. Thus, he had
failed to protect the interest of the Bank which was
violative of Regulation 3 of the UCO Bank Officer
Employees' (Conduct) Regulations, 1976. Secondly, the
employee had continued to permit over-drawing of
amounts in various accounts despite receiving
instructions to the contrary. It was again found to be
violative of Section 3 of the aforesaid Regulations of
1976. The third charge was that the employee had
deliberately not reported irregularities to his superiors
with an ulterior motive which again constituted failure to
discharge his duties with utmost integrity or devotion
which was in breach of Clause 3 of the aforesaid
Regulations of 1976. All these charges have been proved
against the employee. However, not one of the charges
mentions the actual loss caused to the Bank. In fact,
the charge is that the employee's acts indicate that he
was guilty of having violated the provisions of Regulation
3 of the UCO Bank Officer Employees' (Conduct)
Regulations, 1976 and not for having caused any loss to
the Bank. The disciplinary authority issued a show
cause notice to the employee concerned before
imposing the punishment. The loss caused to the
Bank was not mentioned even in this notice. The
26
submission of Mr. Mantha, that in view of the
observations of the Supreme Court in Nikunja
Bihari (supra), there is no need for a bank to mention the
actual loss caused, is unsustainable. In the aforesaid
case the Supreme Court was only concerned whether the
acts of the employee constituted misconduct. It was not
concerned with the deprivation of gratuity in that case.
Therefore the judgement has no application to the facts
before us. Furthermore the submission that the
employee's conduct amounted to moral turpitude is also
without merit. It is an afterthought. The employee was
not charged for having committed acts which were
perceived to be of moral turpitude on his part. The
judgements cited by Mr. Mantha regarding what
constitutes moral turpitude therefore have no application
to the facts and circumstances in this case. The Bank
cannot, in our opinion, forfeit the gratuity without
following the provisions of Section 4(6) of the Gratuity Act.
17. The contention of Mr. Mantha that this denial
of gratuity can be regularized by providing a fresh
show cause to the employee at this stage, detailing
the loss caused to the Bank and asking for his
explanation before denying the gratuity, is, in our
opinion, untenable. An employee cannot be subjected to
two enquiries for the same acts of misconduct. The
second enquiry is not envisaged in law. An employer
cannot be permitted to keep holding enquiries in order to
fix a liability on the employee. All allegations against the
employee ought to have been mentioned in the charge-
sheet which was issued to him before holding the
disciplinary enquiry. Had the Bank been able to
assess the loss caused to it, it should have been
mentioned in the charge sheet. Having omitted to do
so, the Bank cannot be afforded another chance to nail
the employee and plug the lapses. If the Bank was of the
opinion that the loss could not be ascertained at that
stage, as submitted by Mr. Mantha, it could have
mentioned so in the charge sheet. Even at the time of
issuing the show cause notice to the employee on
submission of the enquiry report, the Bank did not
mention the loss. The Bank's communication dated
15th February, 2010 only requires the employee to show
cause why his gratuity should not be forfeited. It does not
say anything about the actual loss caused to the Bank.
There was no bar on the Bank when it issued the
charge sheet or indeed the show cause notice before
imposition of the punishment, on mentioning the
loss caused to it. The Bank cannot be permitted to
27
improve upon its case only in order to ensure that
the gratuity is fortified. Moreover, the submission of
Mr. Mantha that the show cause notice will be issued
granting an opportunity to the employee to defend himself
is also of no avail. The trustees of the gratuity fund who
have issued the earlier show cause notice are not the
employer of the respondent employee. They have no
authority to issue any such show cause notice. Once the
employer has held the employee guilty of conduct
unbecoming of an Officer, no further action can be taken
by the employer. A second enquiry to ensure the
denial of gratuity is unacceptable.”
67. The petitioner though in this case, admits that payment of gratuity act is
applicable to the petitioner bank.
68. On perusal of the impugned order of the controlling authority and the
appellate authority this Court finds that certain observations and findings
have been given by the said authorities in respect of the enquiry
proceeding, which on perusal, appears to be beyond the powers of the said
authorities in interfering with the disciplinary/enquiry proceeding and it‟s
findings..
69. Accordingly the relevant portion where the said authorities have given their
findings as to the validity of the enquiry proceeding are hereby set aside.
70. The portion which allows the gratuity in favour of the employee is hereby
upheld.
71. The controlling authority shall release the amount of gratuity deposited
with it along with interest to the respondent no. 3 within 30 days from the
date of this order/judgment.
72. Writ application is thus dismissed.
73. Connected application, if any, stands disposed of.
74. Interim order, if any, stands vacated.
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75. Urgent Photostat certified copy of this judgment, if applied for, be supplied
to the parties expeditiously after due compliance.
[Shampa Dutt (Paul). J]