Canara Bank,Head Office, Bengaluru Thru. Its Chairman Cum Managing Director and 2 Others Vs Appellate Authority,Payment of Gratuity Act/Deputy Chief Labour Commissioner(C),Kanpur and 2 Others

A.F.R.

Neutral Citation No. - 2024:AHC-LKO:14849

Court No. - 6

Case :- WRIT - C No. - 1673 of 2024 Petitioner :- Canara Bank,Head Office, Bengaluru Thru. Its Chairman Cum Managing Director And 2 Others Respondent :- Appellate Authority,Payment Of Gratuity Act/Deputy Chief Labour Commissioner(C),Kanpur And 2 Others

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Counsel for Petitioner :- Birendra Prasad Singh Counsel for Respondent :- A.S.G.I.,Ankit Pande

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Hon'ble Alok Mathur,J.

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Heard Sri Birendra Prasad Singh, learned counsel for petitioners as well as Sri Ashwani Kumar Singh, learned counsel for respondent Nos. 1 & 2 and Sri Ankit Pandey, Advocate has appeared on behalf of respondent No. 3.

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The petitioner, a nationalized bank has approached this Court assailing the order dated 29.11.2023 passed by the appellate authority under the Payment of Gratuity Act, 1972 i.e. Deputy Chief Labour Commissioner (Central), Kanpur whereby while deciding the appeal preferred by the employee i.e. respondent No. 3, the petitioner has been directed to deposit entitled gratuity amount of Sri K. Mohammad Hafeez/respondent No. 3 before the Controlling Authority within a time from the date of receipt of the said order subject to outcome of the investigation of the criminal proceedings.

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The brief facts of the present case are that the employee had joined the Syndicate Bank now Canara Bank as a clerk and was subsequently promoted as an officer of on 30.05.1999 and further to the post of General Manager till he was dismissed from service on 16.12.2019. Certain irregularities were noticed wherein respondent No. 3 has disbursed large amount of loans and for the said action he was placed under suspension on 17.05.2017 and also served with a charge-sheet on 23.11.2018 under the Regulation of the Syndicate Bank Officers Employees' (Discipline & Appeal) Regulations, 1976 wherein he is alleged to have granted loans on the basis of fake documents in violation of the guidelines of the Bank. After due inquiry, he was found guilty of the charges and he was dismissed from service by order dated 16.12.2019.

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Against the order of dismissal dated 16.12.2019, respondent

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No. 3 has preferred a departmental appeal and as per the impugned order, the departmental appeal is still pending. The petitioner has also lodged a first information report against respondent No. 3 and a chargesheet has been filed in the court of competent jurisdiction and the trial is also pending. In the aforesaid circumstances, the petitioner had issued a notice to the employee under Section 4(6)(a) of the Payment of Gratuity Act, 1972 asking him to show cause as to why the gratuity may not be forfeited. The said notice is dated 10.01.2020 and as per the receipt of the speed post annexed along with the said document, it is indicated that the same was dispatched on 14.01.2020. The said notice was sent under the signatures of the Regional Manager, Syndicate Bank, Lucknow and lastly by means of order dated 28.01.2020 the claim of the respondent No. 3 for gratuity was rejected in terms of Regulation 46)(1)(e) of Syndicate Bank (Officers) Service Regulations, 1979 and Section 4(6)(a) and Section 4(6)(b)(ii) of the Payment of Gratuity Act, 1972.

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Learned counsel for petitioner has submitted that there were serious allegations against the petitioner whereby loans of over 1400 crores were disbursed by the employee contrary to the guidelines of the bank for which a dismissal order has been passed and because of the loss suffered by the bank, the petitioner is entitled to pass an order under Section 4 SubClause 6 of the Act of 1972 and forfeit the gratuity. He further submits that opportunity of hearing was given to the employee inasmuch as a show cause notice was sent to him on 10.01.2020 and as no response was received, the petitioner proceeded to pass an order of forfeiture of gratuity on 28.01.2020. He submits that the appellate authority has held that just merely because the appeal against the order of dismissal is pending and a trial against him is also pending and therefore the order of forfeiture of gratuity was premature and should not have been passed. He submits that there is no provision under Section 4 Sub-Clause 6 of the Act of 1972 providing for passing of the order of forfeiture only after confirmation of the order of dismissal on conviction for offence for which the employee is charged by the court of competent jurisdiction.

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He further submits that in case the departmental appeal is decided in favour of the employee then the order of penalty of dismissal shall be set aside and if in the criminal proceedings the employees exonerated he shall be absolved from the criminal charges leveled against him, hence, there is no reason for forfeiting his gratuity and therefore submits that there is no infirmity in the impugned order.

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Learned counsel for respondent while supporting the

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impugned order has submitted that primarily a perusal of the record would indicate that the said order of forfeiture of gratuity has been passed without giving any opportunity of hearing to the employee. It has been stated that show cause notice dated 10.01.2020 was dispatched on 14.01.2020 asking the employee to submit his response within seven days of the receipt but in a very hasty manner the order was passed on 28.01.2020 forfeiting his gratuity. He further submits that while passing the order dated 28.01.2020, the Regional Manager of the Syndicate Bank has nowhere considered the fact that any opportunity was given to the employee nor his satisfaction has been recorded that despite opportunity the employee has failed to appear or file his objections with regard to forfeiture to gratuity and in undue haste has proceeded to pass the order dated 28.01.2020 forfeiting the gratuity.

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He further submits that accordingly the order is on the face of it illegal and arbitrary and in violation of principle of natural justice. It has further been submitted that the allegation levelled against the petitioner has resulted in order of dismissal. He submits that the order of dismissal has not yet attained finality inasmuch as the departmental appeal as provided for in the relevant service rules is still pending before the appellate authority where the employee has fair chance of success and even the trial proceedings are pending and unless these proceedings are concluded, it cannot be held that respondent No. 3 is guilty for causing loss to the petitioner and accordingly the impugned order should not have been passed.

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It has further been stated that as per the provisions of Section 7 which provides for determination of the amount of gratuity, Sub-Section 4(a) provides that in case there is a dispute as to the amount of gratuity payable to an employee or as to the admissibility of any claim then the employer is under a mandate to deposit with the Controlling Authority such amount as he admits to payable to him as gratuity. It is stated that the order of appellate authority is squarely covered by provisions of Section 4(7)(a) of the Payment of Gratuity Act and the said deposit is subject to the outcome of the investigation of the criminal proceedings.

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I have heard learned counsel for parties and perused the record.

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The writ petitioner is the employer of respondent No. 3 and in exercise of powers contained in Section 4(6(a) of the Payment of Gratuity Act forfeited the gratuity of respondent No. 3 for having cause lost to the petitioner and also that he was dismissed from service on 16.12.2019. The order of forfeiture

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of gratuity was challenged by before the appellate authority under the Payment of Gratuity Act, 1972 who rejected his claim holding that the act of forfeiture of gratuity by the petitioner was just and proper. The order of the Controlling Authority dated 12.10.2021 was challenged by the appellate authority under the Payment of Gratuity Act before the Dy. Chief Labour Commissioner (Central), Kanpur by respondent respondent No. 3. The appellate authority after considering the relevant facts and specially the fact that punishment of dismissal from service was subject to the appeal which was pending before the appellate authority and also that the disciplinary authority while passing the order of dismissal has not imposed the punished of forfeiture of gratuity, coupled with the fact that the criminal proceedings initiated by the Central Bureau of Investigation were also pending and the matter was sub-judice, he was of the view that there was no conclusive material to hold that respondent No. 3 was guilty of the charges levelled against him and accordingly was of the view that the act of forfeiture of gratuity was premature and not justified and that the petitioner has to await the outcome of investigation as held by Hon'ble the Supreme Court in the case of Suraj Pratap Singh Vs. C.M.D., BSNL (Petition for Special Leave to Appeal No. 4717 of 2020) .

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Accordingly, in the aforesaid circumstances, the appellate authority modified the order of Controlling Authority and imposed conditions as prescribed under Section 7(4)(a) of Payment of Gratuity Act directing the petitioner to deposit entitle amount of gratuity of respondent No. 3 before the Controlling Authority within one week from the date of receipt of his order and against the outcome of investigation of criminal proceedings.

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Provisions of Section 7 of the Payment of Gratuity Act, 1972 would indicate that as per Sub-Section (1) a person who is eligible for payment of gratuity may make an application in writing to the employer for payment of gratuity and according to Sub-clause (2), as soon as gratuity becomes payable, the employer shall determine the amount of gratuity and give notice to the person to whom the gratuity is payable and according to Clause (3) pay the amount of gratuity within 30 days from the date it becomes payable. In case the gratuity is not paid within 30 days then according to Sub-Section (3A), simple interest as notified by the Central Government has to be paid for the delay in making the said payment. Sub-Section 4(a) provides that wherever there is a dispute with regard to amount of gratuity payable to the employee or to the admissibility of the claim then the employer shall deposit with the Controlling Authority such amount as he admits payable by him as gratuity. Wherever

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there is a dispute and the employer is required to make the payment as per the provisions of Sub-section 4 (a) then the matter is referred to the Controlling Authority for deciding the dispute and after giving a reasonable opportunity of hearing and after conducting such inquiry he may direct the employer to pay such amount or to reduce amount as determined to the employer as per provisions of Sub-Section 4(c).

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In the present case, once provisions of Section 4(a) have been invoked by the appellate authority requiring the petitioner to deposit admitted amount of gratuity then clearly the authorities have taken note of the dispute raised by the petitioner with regard to the admissibility of quantum of payment of gratuity payable to the respondent-workman. The employer cannot escape his liability to deposit the amount as provided in Section 4(a) and the petitioner cannot be said to be aggrieved inasmuch as the dispute pertaining to payment of gratuity is yet to be finally determined. The controlling Authority has clearly held that when once the departmental appeal is pending before the appellate authority and even the criminal case is pending before the competent court the forfeiting of the gratuity is premature and accordingly the issue pertaining to payment of gratuity would attain finality only when these pending matters are decided.

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Considering the appellate order, this Court is of the view that the petitioner has rightly been asked to deposit the admitted amount in terms of Section 7(4)(a) of the Payment of Gratuity Act. The said deposit is subject to outcome of the investigation of the criminal proceedings. The findings recorded by the appellate authority that the act of forfeiture of gratuity was premature is also confirmed by this Court in light of the fact that respondent No. 3 has already preferred an appeal against the order of dismissed dated 16.12.2019 which is pending consideration before the appellate authority. In case the appeal is allowed, then the order of dismissal would be liable to be set aside in which case the penalty of forfeiture of the gratuity cannot be imposed upon respondent No. 3. Therefore, the petitioner had to await the outcome of the order of appellate authority before whom the order of dismissal was questioned by respondent No. 3.

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In case the petitioner wishes to forfeit the gratuity of the respondent-employee then he has to comply with the provisions contained in Section 7(6)(a) of the Act of 1972. Accordingly, this Court does not find any justification for interference in the impugned appellate order dated 29.11.2023 and the same is modified to the extent that , therefore petitioner is directed to deposit the entitled gratuity amount of respondent No. 3 before

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the controlling authority within a week from the date of receipt of this order and is at liberty to proceed against him afresh after a decision of the departmental appeal inasmuch as in case the appeal is allowed then the order of dismissal would be set aside and petitioner will not have any power under Section 4(6))(a) to forfeited the gratuity payable to the employee and in case the appeal is rejected, they have liberty to proceed afresh as provided hereinabove

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Subject to the aforesaid, the writ petition stands dismissed .

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(Alok Mathur, J.)

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Order Date :- 20.2.2024

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Ravi/

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Digitally signed by :- RAVI SHANKAR SRIVASTAV High Court of Judicature at Allahabad, Lucknow Bench

Canara Bank,Head Office, Bengaluru Thru. Its Chairman Cum Managing Director and 2 Others v. Appellate Authority,Payment of Gratuity Act/Deputy Chief Labour Commissioner(C),Kanpur and 2 Others

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Canara Bank,Head Office, Bengaluru Thru. Its Chairman Cum Managing Director and 2 Others v. Appellate Authority,Payment of Gratuity Act/Deputy Chief Labour Commissioner(C),Kanpur and 2 Others

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