Sri Milan Kumar Ghosh vs The Union Of India & Ors
2022 Latest Caselaw 2562 Cal

                IN THE HIGH COURT AT CALCUTTA
                    Civil Appellate Jurisdiction
                           Appellate Side

Present :-     Hon'ble Mr. Justice I. P. Mukerji
               Hon'ble Mr. Justice Aniruddha Roy


                             FMA 636 OF 2019

                          Sri Milan Kumar Ghosh
                                      Vs.
                        The Union of India & Ors.

   For the Appellants            :-    Mr. Lakshmi Kanta Pal,
                                       Mr. Bandhu Brata Bhula.

   For the Respondents           :-    Mr. Siddhartha Banerjee,

Mr. Souradeep Banerjee.

   Judgment On                   :-    06.05.2022.




I. P. MUKERJI, J.:-

On 1st November, 1977, the appellant writ petitioner was appointed as

Agriculture Officer in the respondent bank. He joined service and was

posted at its Purulia branch. On 6th March, 1996 for alleged acts of

misconduct he was placed under suspension. This suspension order was

revoked on 28th January, 1997. In this intervening period disciplinary

proceedings were started against him on the said charge of misconduct and

continued till 2nd June, 1999 when the disciplinary authority imposed the

punishment of reduction of his pay scale by three stages with cumulative

effect.

In 2013 the appellant superannuated. On his retirement, out of the

retirement financial benefits that he was entitled to, i.e. regular monthly

pension, gratuity, own contribution to provident fund, leave encashment,

additional retirement benefits, the appellant received all, except gratuity

and additional retirement benefits. These were withheld by the bank. On 3rd

November, 2013 they informed him that those amounts could not be released to him as a criminal case which was started by the Central Bureau

of Investigation (CBI), was pending against him.

This withholding of gratuity and additional benefits by the bank was the

subject matter of the writ application preferred by the appellant (WP No.

28123 (W) of 2014).

By a detailed judgment and order dated 11th January, 2019, the learned

single judge was pleased to dismiss the writ application.

Hence, this appeal.

A point of some interest has arisen for consideration.

The Payment of Gratuity Act, 1972 applied to the service of the appellant.

Section 4 of the Act provides that on termination of employment after

continuous service for not less than 5 years gratuity would be payable to an

employee. Sub-section 6 of Section 4 provides the circumstances when

gratuity is to be forfeited. It is in the following terms:-

"(6) Notwithstanding anything contained in sub-section (1),--

(a) the gratuity of an employee, whose services have been terminated for any act, wilful 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 17 [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."

Unquestionably, none of the grounds in sub-section 6 is attracted to the

case of the appellant. The service of the appellant was never terminated for

any of the acts mentioned in the sub-section. Pendency of the criminal case

against him at the instance of the CBI is certainly not one of the grounds in

sub-section 6, for withholding of his gratuity.

The bank has justified its action on the basis of its regulations of 1995.

Regulation 46 of the banking regulations lay down the following:-

"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 against him. The gratuity shall be

paid to him on 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.

Explanation:- In this chapter.

a) The expression "serious crime" includes a crime involving an

offence under Official Secrets Act, 1923 (19 of 1923):

b) The expression "grave misconduct" includes the communication

or disclosure of any secret official code or password or any

sketch, plan, model, article, note, documents or information, such

as is mentioned in Section 5 of the Official Secrets Act, 1923 (19

of 1923) which was obtained while holding office in the Bank so

as to prejudicially affect the interests of the general public or the

security of the State.

c) The expression "fraudulently" shall have the meaning assigned

to it under Section 25 of the Indian Penal Code, 1860 (45 of

1860),

d) The expression "criminal breach of trust" shall have the meaning

assigned to it under Section 405 of the Indian Penal Code, 1860

(45 of 1860);

e) The expression "forgery" shall have the meaning assigned to it

under Section 463 of the Indian Penal Code, 1860 (45 of 1860)."

It stipulates, inter alia, that if a judicial proceeding is pending, gratuity

shall not be paid to an employee until the conclusion of the proceedings

against him. The CBI case is a judicial proceeding and is pending against

the appellant.

Mr. L. K Pal, learned Advocate for the appellant made a most pertinent

submission. He submitted that the circumstances when gratuity could be

withheld from an employee have been specified in sub-section 6 of Section

4 of the Payment of Gratuity Act, 1972. They do not apply to the appellant.

The banking regulations contrary to or in conflict with those provisions

should be disapplied.

Mr. Siddhartha Banerjee, learned Advocate for the Bank submitted that

these regulations were made in exercise of powers under Section 19(2)(f) of

the Banking Companies (Acquisition and Transfer of Undertakings) Act,

1970 and have statutory sanction. This has also been noted by the learned

single judge.

VIEWS

These regulations are not under challenge by the appellant on the ground

that they are inconsistent with Section 4 sub-section 6 of the Payment of

Gratuity Act, 1972 and hence should be struck down or disapplied.

In R. Veerabhadram Vs. Government of A.P reported in (1999) 9 SCC 43,

an identical provision in the AP Revised Pension Rules, 1980 fell for

consideration before the court. It provided that during the pendency of any

judicial proceeding the State would be permitted to withhold gratuity of the

employee. The Supreme Court opined:

"7. The payment of gratuity was withheld, in the present case, since the

criminal prosecution was pending against the appellant when he retired. Rule

52(c) of the A. P. Revised Pension Rules, 1980 expressly permits the State to

withhold gratuity during the pendency of any judicial proceedings against

the employee. In the present case, apart from Rule 52(c), there was also an

express order of the Tribunal which was binding on the appellant and the

respondent under which the Tribunal had directed that death-cum-retirement

gratuity was not to be paid to the appellant till the judicial proceedings were

concluded and final orders were passed thereon. In view of this order as well

as in view of Rule 52(c), it cannot be said that there was any illegal

withholding of gratuity by the respondent in the case of the appellant. We

therefore, do not see any reason to order payment of any interest on the

amount of gratuity so withheld."

The said ratio was upheld by the Supreme Court in Y K Singla Vs. Punjab

National Bank & Ors. reported in (2013) 3 SCC 472. This case also

concerned grant of interest for the delay in payment of gratuity. The

Supreme Court was of the view that withholding of gratuity during

pendency of the judicial proceedings against the employee was legitimate

and that the employee would not be entitled to any interest for this period.

It said:-

"11. It is apparent from a perusal of the reasoning recorded by the High Court, that the High Court relied upon Regulation 46 of the Punjab National Bank (Employees) Pension Regulations, 1995 (hereinafter referred to as, the 1995 Regulations). Regulation 46 is being extracted hereunder:-

"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 against him. The gratuity shall be paid to him on 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." (emphasis is ours) Having perused Regulation 46(2), we are of the view, that the High Court was fully justified in concluding, that it was open to the PNB not to pay to the appellant gratuity, till the culmination of the proceedings pending against him. It is, therefore, apparent, that non-release of gratuity to the appellant after 31.10.1996 (when the appellant retired from his employment, with the PNB), till his acquittal by the Special Judge, CBI Court, Chandigarh, on 31.10.2009, cannot be faulted."

We are bound by these decisions.

Applying the ratio of the above Supreme Court decisions, in an employment

governed by the Banking Regulations of 1995 or any similar enactments

having statutory sanction, an employer can withhold the gratuity and

additional retiral benefits of an employee against whom a judicial

proceeding is pending, till its conclusion. This action seems to be justified

even if no grounds exist under sub-section 6 of Section 4 of the Payment of

Gratuity Act, 1972 to withhold his gratuity. The justification seems to be

this. Suppose in a judicial proceeding a finding is entered that an employee

has caused a quantified monetary damage to the employer which is

recoverable from him. This amount can be recovered from the withheld

gratuity and other retiral benefits.

Mr. Pal points out that even if the appellant is convicted in the pending

judicial proceeding instituted by the CBI, there cannot be a remote

possibility of any quantification of damage by the criminal court or recovery

thereof from the withheld gratuity and additional retiral benefits. Learned

counsel may be right but according to the dicta of the Supreme Court read

with the regulations, one has to wait till the conclusion of the proceedings.

However, considering the fact that the CBI case is pending for a long time

against the appellant and that he has retired from service nearly 10 years

ago, we direct that the CBI court shall dispose of the case within 4 months

of communication of this order. The respondent bank shall take a decision

with regard to release of gratuity of the appellant/petitioner and additional

retiral benefits in accordance with the said regulations and the above

observations within 4 weeks of conclusion of the proceedings before the

criminal court.

In principle, we affirm the impugned judgment and order dated 11th

January, 2019 but we modify it, to the extent as above considering the

special facts and circumstances arising from long pendency of this case.

The appeal is disposed of accordingly.

Urgent certified photo copy of this judgment and order, if applied for, be

furnished to the appearing parties on priority basis upon compliance of

necessary formalities.

I agree.

(Aniruddha Roy, J.)                                         (I. P. Mukerji, J.)