Allowed

M/S. Canara Bank v. Smt. Shantha Kumari

Karnataka HC26 Jul 2024WA/1259/2022

Case brief

AI extract

What is this about?

Bank appealed against direction to pay a deceased employee's widow gratuity of Rs.2,81,290/- with interest. The Division Bench held that outstanding employee dues may be recovered from gratuity based on authorization/undertaking, distinguished forfeiture-as-punishment precedent, set aside the Single Judge's order and the Appellate Authority's order.

What the court decided

AI extract

M/S. Canara Bank Vs Smt. Shantha Kumari — Pension and Retirement Benefits | Karnataka HC (2024)

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WA 1259/2022

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IN THE HIGH COURT OF KARNATAKA AT BENGALURU

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DATED THIS THE 26^TH DAY OF JULY, 2024

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PRESENT

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THE HON'BLE MR JUSTICE V KAMESWAR RAO

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AND

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THE HON'BLE MR JUSTICE C M JOSHI WA NO. 1259 OF 2022 (L-RES)

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BETWEEN:

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M/S. CANARA BANK, HEAD OFFICE AT NO.112, J.C.ROAD, BENGALURU – 560 002, REPRESENTED BY MR.H.G.RAMESH, ASSISTANT GENERAL MANAGER, HRM, CIRCLE OFFICE.

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…APPELLANT

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(BY SRI. SANDESH CHOUTA, SENIOR COUNSEL FOR SRI. VIKRAM UNNI RAJAGOPAL, ADVOCATE)

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AND:

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SMT. SHANTHA KUMARI, WIFE OF LATE SHRIMANTHA D PUJARI, AGE: MAJOR, NO.11/524, SHANTHI NIVAS, BHARAMPUR, BORABAI NAGAR, KALBURGI – 585 103. (BY MS. GEETA.R.SHINDE, ADVOCATE)

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…RESPONDENT

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THIS APPEAL IS FILED UNDER SECTION 4 OF THE KARNATAKA HIGH COURT ACT PRAYING TO SET ASIDE THE ORDER DATED 13/09/2022 PASSED BY THE LEARNED SINGLE JUDGE IN WP 11463/2020 AND ALLOW WP BEARING WP NO.11463/2020.

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THIS APPEAL HAVING BEEN HEARD AND RESERVED ON 12.06.2024, COMING ON FOR PRONOUNCEMENT OF JUDGMENT THIS DAY, THE COURT DELIVERED THE FOLLOWING:

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CORAM: THE HON'BLE MR JUSTICE V KAMESWAR RAO AND

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THE HON'BLE MR JUSTICE C M JOSHI

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CAV JUDGMENT

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(PER: THE HON'BLE MR JUSTICE V KAMESWAR RAO)

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This appeal has been filed by Canara Bank challenging the order dated 13.09.2022 passed by the learned Single Judge in W.P.No.11463/2020 (L-RES), whereby the learned Single Judge has dismissed the writ petition filed by Canara Bank and thereby directing the Canara Bank to comply with the order of the Appellate Authority within three weeks from the date of receipt of copy of the order.

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Some of the relevant facts to be noted from the record are, Shrimantha D. Pujari, the husband of respondent (who has since expired) joined the service of the appellant-Bank on 13.03.1975. At relevant point of time i.e., on 14.12.2005, while he was working as a Clerk, disciplinary proceedings were initiated against him in

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respect of misconduct relating to discounting of

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cheques/TODs in the SB A/c No.16818 of the respondent.

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The punishment of ‘Compulsory Retirement’ was imposed on him.

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Sri. Pujari had challenged the said punishment in an Industrial Dispute. During the pendency of the Industrial Dispute, Sri. Pujari expired. Resultantly, his legal heirs withdrew the Industrial Dispute on 11.12.2018. In the meanwhile, an application was filed by Sri. Pujari for release of Gratuity amount before the Controlling Authority, which was rejected.

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The case of the appellant-Bank was that at the time of compulsory retirement of Sri. Pujari, there were direct and indirect liabilities outstanding in his name, which were to be cleared by him. As on 15.09.2019, the liabilities were Rs.9,85,420.24/- under staff clean OD apart from Staff Welfare Fund liability of Rs.1,29,691/- payable along with interest at 10% p.a.

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Sri. Pujari challenged the order of Controlling Authority before the Appellate Authority in Appeal

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No.36(129)/2018/B1. Pursuant to his death on

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04.05.2018, the said appeal was prosecuted by his wife, who is the respondent in these proceedings.

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The Appellate Authority by its order dated 31.10.2019 (read with Corrigendum dated 13.11.2019), has allowed the appeal by directing the appellant-Bank to pay gratuity amount of Rs.2,81,290/- along with interest at the rate of 10% p.a. from the date it became due till the actual date of payment.

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The said order became the subject matter of the writ petition being W.P.No.11463/2020, wherein the impugned order has been passed by the learned Single Judge.

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Learned Single Judge has dismissed the petition by interalia holding that while Staff Welfare Fund comes within the domain of service conditions, but home loan occupies a different position as home loan is governed by the agreement of loan and it is for the appellant-Bank to act in terms of the said agreement and exercise all rights under the said agreement as against the debtor; therefore, the

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appellant-Bank could not on the basis of an authorization, recover the same from the Gratuity amount payable by it.

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The submission of Sri. Sandesh Chouta, learned Senior Counsel appearing for the appellant-Bank is primarily the home loan which is an outstanding liability of Rs.12,60,314.18 as on 30.09.2022 is not the subject matter of these proceedings. The appellant-Bank intended to adjust the Gratuity amount towards the Staff Clean OD and Staff Welfare Fund liability and not home loan. According to him, it is settled law that employers are entitled to adjust Gratuity against dues payable to employees and as such, the Bank is justified in adjusting the aforesaid two amounts against the Gratuity and not home loan as dealt with by the Learned Single Judge.

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According to him, the learned Single Judge failed to appreciate that immediately after the exit from the services of the Bank, late Sri. Pujari was requested to come forward and discharge his liabilities towards the appellantBank. However, he did not come forward and failed to discharge his liability. Therefore, the appellant-Bank had

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no choice, but to proceed for adjustment of terminal benefits towards his liabilities and the respondent being the wife does not have any right to claim the Gratuity benefits from the appellant-Bank.

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In this regard, the learned Senior Counsel submitted that, the law on the aspect of recovery is well settled in as much as the Punjab and Haryana High Court in the case of Punjab and Sindh Bank, Chandigarh -Vs.Regional Labour Commissioner, (Central) Kendriya Sadan, Chandigarh and Others [2008 (117) FLR 710] , has held that the Bank is well within its right as an employer to adjust the amount of Gratuity towards outstanding dues of the employee. In fact, the Controlling Authority has relied upon this judgment while dismissing the petition filed by late Sri. Pujari. In support of his submissions, he has also relied upon the following judgments:

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i) Secretary, ONGC Ltd. and Another -Vs.V.U. Warrier [(2005) 5 SCC 245] ;

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ii) Steel Authority of India Ltd. -Vs.Raghbendra Singh and Others [2020 SCC Online SC 1063] ;

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iii) Karnataka State Road Transport Corporation -Vs.- The Deputy Labour Commissioner and Others [W.P.No.50800/2013 , decided on 18.06.2014 ] ;

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iv) Bangalore Metropolitan Transport Corporation -Vs.- The Deputy Labour Commissioner and Others [W.P.No.45794/2015 , decided on 16.10.2020 ] ;

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v) Bangalore Metropolitan Transport Corporation -Vs.- The Deputy Labour Commissioner and Another [W.P.No.12255/2016 , decided on 10.01.2020 ] ;

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On the other hand, learned counsel for the respondent would justify the order passed by the Appellate Authority as upheld by the learned Single Judge. According to her, the Appellate Authority has on an appreciation of law, held that the requirement in law is, the appellant-Bank being employer should, by quantifying the loss; by conducting enquiry and further by issuing show-cause notice, could forfeit the Gratuity, which process has not been complied with by the appellant-Bank.

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She has also relied upon the judgment of this Court in the case of G. Narayana Rao -Vs.V.R. Nagendra [1998-III LLJ 1991] and of the Hon’ble

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Supreme Court in the case of Jaswant Singh Gill -Vs.Bharat Coking Coal Ltd. [Civil Appeal No.4770/2006 , decided on 10.11.2006 ] [(2007) 1 SCC 663] wherein the Court has held the right to Gratuity is a statutory right and admittedly, the appellant was not charged with, nor was given an opportunity to show-cause why Gratuity be not withheld. According to her, no provision of law has been shown to justify Gratuity could be withheld as a measure of punishment. Hence, there being some basis for the Appellate Authority to grant the relief in favour of the respondent, which has been upheld by the learned Single Judge, this Court would not like to interfere with the impugned order and dismiss the present appeal.

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ANALYSIS:

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Having heard the learned counsel for the parties and perused the record, the short question which arises for consideration is, whether the Appellate Authority is justified in directing the appellant-Bank to pay the amount of Rs.2,81,290/- as Gratuity with 10% interest from the date

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it became due, which order has been upheld by the learned Single Judge?

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The case of the appellant-Bank before the Controlling Authority was that, at the time of compulsory retirement of late Sri. Pujari, there were direct and indirect liabilities outstanding in his name. As on 15.09.2019, the liabilities were for Rs.9,85,420-24 against the staff clean OD and Rs.1,29,691/- against Staff Welfare Liability Fund, with interest at 10% p.a.

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The Appellate Authority, who had allowed the appeal, had directed the payment of Gratuity only on the ground that the same cannot be forfeited without following the due process. Whereas the learned Single Judge, who though dismissed the writ petition, has held that Staff Welfare Fund would come within the domain of service conditions. Meaningfully read, the said amount can be recovered from the Gratuity. But, insofar as the other amount is concerned, the same was considered as Home Loan and it was held by the learned Single Judge that the same occupies a completely different position in as much as

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home loan could be recovered in terms of the loan agreement and the Bank could not have adjusted the same from and out of Gratuity amount.

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Suffice to state the learned Single Judge has

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erred in construing the amount of Staff Clean OD as home loan account, as according to Mr. Chouta, the home loan is not subject matter of these proceedings. So, the issue need to be seen whether the Staff Clean OD and Staff Welfare Fund Liability can be recovered/adjusted against Gratuity. The learned Single Judge has not held that the Staff Welfare Fund Liability cannot be adjusted. So, the issue for consideration, can be proceeded on the premise that if the other liability is Staff Clean OD Account and not home loan, whether the same can be adjusted/recovered from Gratuity.

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The Bank has justified the adjustment of the the Staff clean OD Account against Gratuity by relying on the authorization given by late Sri. Pujari and also by relying on the judgment of Punjab and Sindh Bank, Chandigarh (supra). Whereas, the Appellate Authority allowed the claim

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of the respondent by holding recovery from the Gratuity payable to the employee based on an undertaking given by the employee is against Section 14 of the Payment of Gratuity Act, 1972.

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Suffice to state, the law in respect of adjustment/recovery of the dues from Gratuity and also on representation/authorization given by the employee is no more res integra in view of the judgments of this Court and also of the Punjab and Haryana High Court. In Punjab and Sindh Bank, Chandigarh (supra), the Court has, in Paragraph No.10, stated as under:-

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“10. Keeping in view the facts and circumstances of the case and the circumstances under which respondent No. 3 was compulsorily retired from service, we have no hesitation to hold that the respondent-Bank was well within its right to adjust the amount of gratuity towards the outstanding house loan amount of respondent No. 3. An employee cannot enforce his right for post-retiral dues in writ jurisdiction in such circumstances. The conduct of respondent No. 3 was most reprehensible and unbecoming of an officer. Further, by his own act and conduct, respondent No. 3 has put his employer to an immense loss which may be far more commensurate to his own dues. Surely, he is not entitled to the discretionary

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relief from this Court under Articles 226/227 of the Constitution of India. Similar view was taken by this Court in Municipal Corporation, Amritsar v. Jagdamba Dutt (through L.Rs), where the respondent- employee had raised some illegal construction and had overstayed in the allotted quarter even after his superannuation and the appellant-Corporation had withheld his provident fund, gratuity and encashment of earned leave on the plea of

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adjustment of the amount that the respondent had to pay by way of house rent/penalty.”

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(emphasis supplied)

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Similarly, the Single Bench of this Court in the case of KSRTC [WP No.50800/2013 , decided on 18.06.2014 ] (supra), has in Paragraphs No.2 & 3, held as under:-

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“xxx xxx xxx xxx xxx

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2. The only contention of the learned Counsel for the petitioner-Corporation is that the third respondent had availed loan from KSRTC Consumer Co-operative Society in a sum of Rs.40,000/- and as on the date of his retirement, he is due in a sum of Rs.40,000/. This amount should have been deducted while computing gratuity payable to the third respondent by the controlling authority. It is argued that the third respondent had given an undertaking to the KSRTC

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that in the event of loan is not repaid by him, the same can be deducted from his terminal benefits. It is further contended that an additional sum of Rs.19,167/towards gratuity has also been paid to the third respondent in view of the revision of pay scale after his retirement and the said amount also should have been deducted while computing gratuity payable to the third respondent.

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3. Materials on record would clearly indicate that the third respondent has undertaken for deduction of the amount payable to the aforesaid Co-operative Society from his terminal benefits. Therefore, the controlling authority ought to have deducted a sum of Rs.40,000/-, which was due to the aforesaid Cooperative Society by the third respondent as on the date of his superannuation. Therefore, the second respondent is directed to refund a sum of Rs.40,000/-, and a sum of Rs.19,167/- paid by the Corporation towards gratuity in view of the revision of pay scale out of Rs.67,367/-, the deposit made by the petitionerCorporation and balance of the amount in a sum of Rs.8,200/- shall be dispersed to the third respondent. Writ petition is allowed in the aforesaid terms. No costs.”

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(emphasis supplied)

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In the Bengaluru Metropolitan Transport

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Corporation (Supra) [WP No. 45794/2015 decided on

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16.10.2020], the learned Judge of this Court in Paragraphs

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No.7, 9 & 10 has held as under:

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7. Learned counsel for the Corporation would submit that the Controlling Authority and the Appellate Authority have grossly erred in determining the payment of gratuity at Rs.1,41,388/-, as the workman was paid all the entitled gratuity when he had retired and at best the difference payable after reduction of loan and liabilities of the workman was Rs.19,980/- as he had availed various loans.

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9. The Controlling Authority though has determined the difference in gratuity payable to the workman at Rs.1,41,388/-, the workman had availed various loans in the Corporation which are as follows:

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(i) Loan from BMTC Co-operative Society Rs. 11,285/(ii) Loan from BMTC Consumer Society Rs. 20,000/(iii) Marriage Advance Rs. 19,005/(iv) Syndicate Bank TVS loan Rs. 45,000/(v) Uco Bank BSK Branch Rs. 20,400/-

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(vi) URD Amount Rs. 5,718/-

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Total: Rs.1,21,408/-

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10. Hence, the respondent-workman would be entitled to a remainder of the amount after deduction of the aforesaid advances that are availed by the

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employee, which on an undertaking given by the employee was deductible from gratuity. Therefore, the workman would be entitled to Rs.19,980/- which is the remainder of the amount out of Rs.1,41,388/- determined by the Controlling Authority along with interest at 10% per annum from the date of filing of the petition by the workman on 08.04.2010 till the deposit is made by the Corporation before the Appellate Authority i.e.. on 08.09.2012. Hence, the following:

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ORDER

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(i) Writ petition is allowed in part.

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(ii) The order of the Controlling Authority bearing No.ALCB-1/PGA/CR/05/2010-11 dated 30.07.2012 and the order of the Appellate Authority bearing No.DLCB2/PGA/CR/25/2014 dated 24.02.2015 are set aside.

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(iii) The workman is entitled to difference in gratuity of Rs.19,980/- along with interest at 10% per annum from the date of filing of the petition by the workman on 08.04.2010 till the date of deposit i.e., 08.09.2012.

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(iv) The aforesaid order shall be compiled with by the Corporation within six months from the date of receipt of this order.”

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(emphasis supplied)

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In the Bengaluru Metropolitan Transport

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Corporation (Supra) [WP No.12255/2016 decided on 10.01.2020)], the learned Single Judge of this Court has in Paragraphs No.12 & 14, held as under:-

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“xxx xxx xxx xxx xxx

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12. In the ruling of this Court in the case of Bangalore Metropolitan Transport Corporation supra, where the Controlling Authority declines to accept the plea of the Corporation on the deductions, a finding is given that the Corporation did not lay before the authority the material to establish the said deduction. Accordingly, rejected the writ petition, confirmed by the Division Bench and the SLP also came to be rejected. It is significant to note that in the said proceedings after the death of an employee, the Corporation attempted to adjust and disburse the amount payable to his LRs under the head "Gratuity" to the creditors of the deceased. Moreover, the workman had requested the Corporation to credit the gratuity and other retirement benefits payable to him to his SB Account of National Co-operative Bank. In such circumstances, it has been observed that the Corporation cannot disburse the said gratuity amount.”

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“14. For the reasons spelt out in the judgments relating to the undertaking given by the workman referred to supra, the deduction of the amount of Rs. 1,33,550/- Rs.2,205/- = Rs.1,31,345/- to the paid creditors from the gratuity amount of the workman during his lifetime and at his request cannot be held to be untenable. However, the deduction of Rs.2,205/- held to be illegal by the authorities is confirmed. The arguments that the workman was forced to sign the affidavit of undertaking cannot be accepted at this length of time.”

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(emphasis supplied)

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So it must be held that the learned Single Judge

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has erred in dismissing the petition filed by the Canara Bank.

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The Appellate Authority, in its impugned order, which was under challenge before the learned Single Judge, has relied upon the judgment in the case of Jaswant Singh Gill -Vs.- Bharath Coaking Coal Limited (supra), wherein the Supreme Court has held, the right of Gratuity is a statutory right. The appellant was not charged with nor was given an opportunity that his Gratuity will be withheld, as a measure of punishment and hence, could not be forfeited. Suffice to state, the said judgment has no applicability to the facts of this case.

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This we say for the reason that the issue in question in the present case is, not of forfeiting the Gratuity as a measure of punishment, but recovering the dues from the Gratuity.

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So, in view of our above discussion, we hold the learned Single Judge has erred in dismissing the writ petition, which was filed only to recover/adjust the dues as

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were payable by the deceased employee and nothing more. The judgment of the learned Single Judge dated 13.09.2022 in Writ Petition No.11463/2020 and order(s) dated 31.10.2019 (and Corrigendum dated 13.11.2019) of

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the Appellate Authority are set aside.

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Appeal is disposed of .

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No costs.

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In view of the order in the Writ Appeal, pending I.A.No.2/2022 is disposed of as infructuous.

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Sd/-

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(V KAMESWAR RAO) JUDGE