The Gujrat High Court sided with a retired Bank Manager accused by the Chairman of Union Bank of India, of causing monetary loss by haphazardly sanctioning loans, and ordered him to clear the banks retiral dues.
The single bench of Justice Biren Vaishnav held that the Order forfeiting the Chairman’s gratuity was an afterthought as the same was issued only after the penalty of dismissal was modified to compulsory retirement and after the bank manager approached the bank seeking payment of gratuity.
The court in its judgment sided with the retired Bank Manager and directed the bank to pay him an amount of INR 9,77,440 as gratuity. It, however, modified the rate of interest from 10% to 8%.
Brief facts:
At the Union Bank of India, Keshod Branch the respondent, who was the Bank Manager, and the petitioner, who was the Chairman, and the Managing Director were working together since 1984. During their course of employment a charge sheet was issued by the bank leveling certain imputations in the context of disbursement of term loans. After this a departmental inquiry was launched which led to the bank imposing a penalty of dismissal in 2012, which was challenged by the Bank Manager. This led to the appellate authority reducing the punishment to compulsory retirement in appeal.
After this the Bank Manager complained of non-payment of gratuity as required under Section 7 of the Payment of Gratuity Act, 1972. However, the bank issued a show cause notice to the Bank Manager under Section 4(6) of Payment of Gratuity Act, as to why the gratuity should not be forfeited. Pursuant to the response of the Bank Manager, the amount of gratuity was withheld. The controlling authority in this case held that withholding of the gratuity was in contravention of Section 7 of the Act, and the same was later affirmed by the Appellate Authority.
The union bank had largely contested that there was a loss of INR 4.36 crores to the bank which was quantified by the competent authority and therefore, it was in their view just and proper to forfeit gratuity.
In the special civil application before the High Court, the Bank Manager supported the Order of the appellate authority while submitting that there was no quantification of the loss caused to the bank except for a figure of INR 4.36 crores mentioned in the final Order, they took the help of cases UCO Bank and Others v. Anju Mathur and J.B. Micheal D’Souza v. Appellate Authority under the Payment of Gratuity Act, Bangalore and Others in which it was held that if there was failure to quantify loss caused to the bank there was breach of the Section 4(6)(a) of the Act and therefore the orders of the Controlling Authority as well as the Appellate Authority are just and proper.
High Court held:
The High Court agreed with the bank and stated that barring a single line stating the loss of 4.36 crores caused to the bank as there was nothing on record to show how the bank had quantified the loss. It was further observed by the court that the Appellate Authority had rightly assessed the mindset of the bank, especially after the bank had invoked Section 4(6)(a) of the Payment of Gratuity Act for more than two and a half years after the bank manager was penalized.
The court partly allowed the petition, the court stated that, “The orders passed by the Controlling Authority as well as the Appellate Authority so far as directing payment of amount of Rs.9,77,440/- as gratuity are confirmed. However, the rate of interest of 10% is reduced to that of 8% with effect from 16.02.2012. The orders impugned are modified accordingly. No costs.”
Case Title: Chairman and Managing director Union Bank of India v. Jaykant R Gohil
Bench: Justice Biren Vaishnav
Citation: C/SCA/699/2019
Decided on: 06 June 2022
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