1. The petitioner seeks release of withheld gratuity and additional retirement benefits together with compound interest from the date of his retirement till receipt of payment, consequent upon his superannuation.
Learned Advocate appearing for the petitioner submits that, the petitioner was an employee of Bank of Baroda. A disciplinary proceeding was initiated against the petitioner. A punishment was imposed by the disciplinary authority. The petitioner accepted such punishment. The disciplinary authority punished the petitioner by reducing three stages in time scale with cumulative effect from the date of the order of the disciplinary authority. The petitioner retired on September 30, 2013. The petitioner is entitled to receive gratuity and retiral benefits subsequent to his retirement. The punishment imposed by the disciplinary authority does not involve any money claim. The order of the disciplinary authority does not require the petitioner to pay any amount to the bank. A criminal proceeding instituted against the petitioner is pending. Even if, the petitioner is convicted in such criminal proceedings the same will not result in any financial liability of the petitioner towards the bank. Consequently, there is no valid reason why the gratuity and retiral benefits receivable by the petitioner can be withheld by the bank. The bank has no ground to withhold the gratuity and retirement benefits receivable by the petitioner. In support of h
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is contentions learned Advocate for the petitioner relies upon 2007 Volume 1 Supreme Court Cases page 663 (Jaswant Singh Gill v. Bharat Coking Coal Ltd. & Ors.), 2010 Volume 3 Calcutta High Court Notes (Cal) 1981 (Steel Authority of India Ltd. & Anr. v. Taraknath Sengupta & Ors.) and an unreported decision of the Supreme Court rendered in Civil Appeal No. 8251 of 2018 (Union of India & Ors. v. C.G. Ajay Babu & Anr.) dated August 14, 2018.
According to the learned Advocate for the petitioner, the Bank of Baroda (Employees') Pension Regulation, 1995 governing the employment of the petitioner with the Bank of Baroda has no manner of application. The provisions of the Payment of Gratuity Act, 1972 have overriding effect over the Regulations of 1995 framed by the Bank of Baroda governing the employment of the petitioner. He refers to Sections 13 and 14 of the Act of 1972 and submits that, gratuity cannot be withheld by the bank. Consequently, he seeks a direction upon the bank to disburse the gratuity and retiral benefits along with interest.
Learned Advocate appearing for the banks submits that, the petitioner was found to have indulged in serious fraudulent activities warranting the bank to initiate departmental proceedings and lodge a criminal complaint. The criminal proceedings are pending. The departmental proceedings resulted in an order of punishment. Although, the order of punishment passed in the departmental proceeding does not require the petitioner to make good any loss that may have been caused by the petitioner to thebank, the fact that there is a criminal proceeding pending against the petitioner, is sufficient for the bank to withhold the retiral benefits, in terms with the Regulations of 1995. According to him, gratuity can at best be a right to property under Article 300A of the Constitution of India. Such a right is subject to reasonable restrictions. The Regulations of 1995 are statutory regulations having the force of law. The petitioner cannot have an unfettered right to receive gratuity. The right to receive gratuity can be circumscribed by statutory rules. The petitioner is governed by the services rules relating to employees of Bank of Baroda. The Regulations of 1995 allow the bank to withhold the gratuity receivable by an employee in the event of pendency of any judicial proceeding. Any judicial proceeding will include a criminal proceeding. Admittedly, a criminal proceeding is pending against the petitioner. Therefore, the bank is within its rights to withhold the gratuity. In support of his contentions, learned Advocate appearing for the bank relies upon 1999 Volume 9 Supreme Court Cases page 43 (R. Veerabhadram v. Govt. of A.P.), 1995 Volume 6 Supreme Court Cases page 105 (State of Orissa & Ors. v. Kalicharan Mohapatra & Anr.), 2014 Volume 15 Supreme Court Cases page 476 (Government (NCT of Delhi) & Anr. v. K. Srivatsan), 2013 Volume 3 Supreme Court Cases page 472 (Y.K. Singla v. Punjab National Bank & Ors.) and 2012 Volume 13 Supreme Court Cases page 210 (State of Jharkhand & Ors. v. Jitendra Kumar Srivastava & Anr.). He submits that, the writ petition should be dismissed.
During the course of his employment, the petitioner was in charge of the cash overdraft account of Camac Street Branch of the respondent bank. It is alleged against the petitioner that, the petitioner was guilty of violating the extant rules, regulations, guidelines and procedures regulating such accounts and that, the petitioner was guilty of opening several cash overdraft accounts in violation of the law relating thereto. The bank proceeded against the petitioner by initiating disciplinary proceedings and lodging a criminal complaint. The disciplinary proceedings culminated into the Order dated June 2, 1999 by which, the pay of the petitioner was reduced by three stages in time scale with cumulative effect. The criminal complaint against the petitioner received sanction under the provisions of the Prevention of Corruption Act, 1988 on October 5, 1999 for prosecution. A charge sheet was filed by the Central Bureau of Investigation against the petitioner. The charges against the petitioner are under Section 120B read with Sections 409, 421, 471 and 477A of the Indian Penal Code and Section 13(2) read with Section 13(1)(d) of the Prevention of Corruption Act, 1988. The criminal proceedings are still pending.
The petitioner being an employee of the bank is entitled to gratuity under the provisions of the Payment of Gratuity Act, 1972. The bank in question is a body corporate established under the provisions of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970. Section 19(2)(f) of the Act of 1970 empowers the bank to make regulations relating to the employment of its employees. In exercise of powers conferred under Section 19(2)(f) of the Act of 1970, the bank promulgated the Bank of Baroda (Employees') Pension Regulations, 1995. The Regulations of 1995 applies to all employees of the bank on full time work on permanent basis or on part time work on permanent basis on scale wages and who opts and is governed by such regulations. Apparently, the petitioner opted to be governed by the Regulations of 1995. It is not in dispute that, the Regulations of 1995 applies so far as the petitioner is concerned. Regulation 46 in Chapter IX under General Conditions, of the Regulations of 1995 deals with pension. It is as follows:-
"46. Provisional Pension.
(1) An employee who has retired on attaining the age of superannuation or otherwise and against whom any departmental or judicial proceedings are instituted or where departmental proceedings are continued, a provisional pension, equal to the maximum pension which would have been admissible to him, would be allowed subject to adjustment against final retirement benefits sanctioned to him, upon conclusion of the proceedings but no recovery shall be made where the pension finally sanctioned is less than the provisional pension or the pension is reduced or withheld etc., either permanently or for a specified period.
(2) In such cases the gratuity shall not be paid to such an employee until the conclusion of the proceedings subject to the decision of the proceedings. Any recoveries to be made from an employee shall be adjusted against the amount of gratuity payable."
Paragraph 46 of the Regulations of 1995 allows provisional pension equal to maximum pension to be paid to an employee who retired on attaining the age of superannuation or otherwise and against whom a departmental or judicial proceeding is instituted or where departmental proceeding is continued. Sub-Regulation 2 of Regulation 46 stipulates that in cases where departmental or judicial proceedings are instituted or departmental proceedings are continuing, no gratuity shall be paid to an employee till the conclusion of such proceeding against him. In other words, in the event any judicial proceeding is pending against an employee, on the date of the superannuation of the employee concerned, then he is not entitled to any gratuity under Regulation 46(2) of the Regulations of 1995.
Gratuity is a sum of money paid to an employee at the end of a period of his employment. Gratuity is governed by the provisions of the Payment of Gratuity Act, 1972. Section 4 of the Act of 1972 deals with Payment of Gratuity. Section 4(5) of the Act of 1972 allows an employee to receive better terms of gratuity under any award or agreement or contract with the employer if such employee chooses to be governed by any award or agreement or contract with the employer other than the provisions of the Act of 1972. Section 4(6) of the Act of 1972 allows the employer to forfeit gratuity payable to its employee upon the happening of the events stipulated therein. The present case is not one of forfeiture of gratuity. Jaswant Singh Gill (supra) concerns a case where, the employer forfeited gratuity receivable by the employee. In the context of such forfeiture, the Supreme Court while considering the issue whether the rules framed by Coal India Limited governing the employment of its employees would prevail over the Act of 1972 or not, answered such question by holding that, the rules framed by Coal India Limited were not statutory rules and that the provisions of the Act of 1972 must therefore prevail over such rules. It is of the view that, in the event, an employer seeks to forfeit gratuity payable under the Act of 1972, then, the conditions laid down in Section 4(6) of the Act of 1972 must be fulfilled before the forfeiture to happen.
Taraknath Sengupta & Ors. (supra) is a case where, gratuity receivable by the employee was deducted on the ground that the employee retained official accommodation after cessation of employment. It held in the facts of that case that, retention of official accommodation after cessation of employment was not to be linked with the service rendered by the employee. Gratuity cannot be linked with the illegal retention of accommodation. It goes on to say that, where the Act of 1972 does not permit withholding of gratuity and the deduction thereof, such power cannot be given to the employer. It also notices that, the gratuity rules governing the employees of the company were non-statutory and therefore the same could not run contrary to any provision or the object of the Act of 1972. Moreover, the gratuity rules governing the employee concerned, did not empower the authority to deduct gratuity. C.G. Ajay Babu & Anr. (supra) is a case concerning forfeiture of gratuity. It is of the view that, forfeiture of gratuity is not automatic on dismissal from service. It is subject to the provisions of Section 4(5) and (6) of the Act of 1972.
R. Veerabhadram (supra) is a case where, the gratuity of the petitioner was withheld in view of the pendency of a criminal prosecution. In the facts of that case, it was found that, the service rules of the petitioner were statutory in nature and permitted withholding of gratuity during the pendency of a criminal proceeding. Kalicharan Mohapatra & Anr. (supra) is also a case where, the gratuity was withheld due to the pendency of criminal proceedings. It takes note of All India Services (Death- cum-Retirement Benefits) Rules, 1958 and finds that, since Rule 6 allows recovery from pension, and since it allows withholding of gratuity, the Government was entitled to withhold the gratuity. It holds that, it is not necessary that a judicial proceeding should relate to the charge of causing pecuniary loss to the Central or State Government by misconduct or negligence. K. Srivatsan (supra) considers the Central Civil Services (Pension) Rules, 1972 and is of the view that, gratuity can be withheld, if departmental or judicial proceedings are pending against the employee concerned. In Y.K. Singla (supra), the court awarded interest on account of delayed payment of gratuity. The service rules of the petitioner therein permitted withholding of gratuity on account of involvement in criminal case. The gratuity was withheld. Subsequently, the petitioner therein was acquitted in the criminal proceedings. In such context, the court held that, the petitioner was entitled to interest on delayed payment of gratuity. Jitendra Kumar Srivastava & Anr. (supra) is of the view that, pension and gratuity cannot be withheld during the pendency of disciplinary and criminal proceedings if the rules governing the employment of such person does not permit withholding of pension or gratuity.
The authorities noted above are of the view that, a gratuity payable to an employee can either be forfeited or withheld. In the event, it is required to be forfeited then, the forfeiture has to be in accordance with the provisions of the Act of 1972. So far as withholding is concerned, if, the rules of employment are statutory and such statutory rules permit withholding then, withholding is permissible. The statutory rules may provide that, the withholding can happen when a judicial proceeding is pending. It is of no consequence that, the judicial proceeding does not relate to a charge of causing pecuniary loss to the employer, in such a situation.
In the facts of the present case, the Regulations of 1995 governing the employment of the petitioner was promulgated in exercise of powers under Section 19(2)(f) of the Banking Companies (Acquisition and Transfer Undertakings) Act, 1970. Such Regulations are therefore statutory in nature. Such Regulations permit withholding of gratuity when there is a judicial proceeding pending. In the present case, since a criminal proceeding is pending against the petitioner and notwithstanding the fact that, the criminal proceeding does not relate to a charge of causing pecuniary loss to the employer, by virtue of the ratio laid down in Kalicharan Mohapatra & Anr. (supra), it cannot be said that the bank acted illegally in withholding the gratuity receivable by the petitioner.
W.P. No. 28123(W) of 2014 is dismissed. No order as to costs. Urgent certified website copies of this judgment and order, if applied for, be made available to the parties upon compliance of the requisite formalities.