Shri Surendra vs Syndicate Bank
2019 Latest Caselaw 922 Del

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*      IN THE HIGH COURT OF DELHI AT NEW DELHI

                                        Reserved on          : 24.01.2019
                                        Pronounced on       : 13.02.2019

+      W.P.(C) 439/2018 & CM APPLN. 1854/2018

       SHRI SURENDRA                                        ..... Petitioner
                          Through       Mr.Ravi Bassi, Adv. with Mr.Sanyam
                                        Malik & Mr.Nitin Kumar, Advs.

                          versus

       SYNDICATE BANK                                     ..... Respondent
                    Through             Mr.Puneet Taneja, Adv. with
                                        Ms.Laxmi Kumari, Adv.

       CORAM:
       HON'BLE MR. JUSTICE SURESH KUMAR KAIT

                                   JUDGMENT

1. Vide the present petition, the petitioner seeks direction thereby setting

aside impugned order dated 18.10.2017 of the Appellate Authority,

constituted under the Payment of Gratuity Act, 1972, vide which

Administrative order dated 05.03.2016 of respondent bank forfeiting the

gratuity of the petitioner has been upheld. Further seeks direction thereby

directing to restore order dated 12.06.2017 of the Controlling Authority vide

which the controlling Authority, constituted under the Payment of Gratuity

Act, 1972, directed the respondent "to pay the applicant a sum of

₹10,00,000/- (Rupees Ten Lac) as gratuity along with simple interest @

10% per annum on the said amount as per section 7 (3-A) of the Payment of

Gratuity Act, 1972 from the date it became payable i.e. 12.10.2015 (date of

compulsory retirement) till the date when it is actually paid to the

applicant."

2. Counsel appearing on behalf of the petitioner submits that the

petitioner had joined the respondent bank on 21.08.1982 and had worked in

various branches/offices. He was compulsorily retired from the service on

12.10.2015. Till his compulsory retirement, he had put in 33 years and 2

months of continuous service without any break whatsoever. Hence, the

petitioner had become eligible to receive full gratuity, as per the provisions

of section 4 of the Payment of Gratuity Act, 1972.

3. However, the petitioner was served with charge sheet dated

03.11.2014 under the provisions of Syndicate Bank Officer Employees

(Discipline & Appeal) Regulations, 1976. The respondent bank conducted

an enquiry into the matter and the Disciplinary Authority vide its order dated

06.10.2015 imposed the punishment of compulsory retirement from the

services of the bank with immediate effect.

4. It is further submitted that the petitioner was not alleged to have

committed any offence, much less offence involving moral turpitude, either

in the charge sheet or in the orders of the Disciplinary and Appellate

Authorities. He was merely charged with misconduct on the basis of

allegation of certain irregularities, as enlisted in the provisions of

Regulations, 1976 mentioned above.

5. To strengthen of his arguments, has relied upon the case of Jaswant

Singh Gill Vs. Bharat Coking Coal Ltd. and Ors.: 2007(4) ALT 23(SC)

whereby the Hon'ble Supreme Court held as under:-

"10. The Act provides for a closely neat scheme providing for payment of gratuity. It is a complete code containing detailed provisions covering the essential provisions of a scheme for a gratuity. It not only creates a right to payment of gratuity but also lays down the principles for quantification thereof as also the conditions on which he may be denied therefrom. As noticed hereinbefore, sub- section (6) of Section 4 of the Act contains a non- obstante clause vis-a-vis sub-section (1) thereof. As by reason thereof, an accrued or vested right is sought to be taken away, the conditions laid down thereunder must be fulfilled. The provisions contained therein must, therefore, be scrupulously observed. Clause (a) of Sub-section (6) of Section 4 of the Act speaks of termination of service of an employee for any act, willful omission or negligence causing any damage. However, the amount liable to be forfeited would be only to the extent of damage or loss caused. The disciplinary authority has not quantified the loss or damage. It was not found that the damages or loss caused to Respondent No. 1 was more than the amount of

gratuity payable to the appellant. Clause (b) of Sub-section (6) of Section 4 of the Act also provides for forfeiture of the whole amount of gratuity or part in the event his services had been terminated for his riotous or disorderly conduct or any other act of violence on his part or if he has been convicted for an offence involving moral turpitude. Conditions laid down therein are also not satisfied. Termination of services for any of the causes enumerated in Sub- section (6) of Section 4 of the Act, therefore, is imperative."

6. Counsel further submits that neither the Disciplinary nor the

Appellant Authority has power to convict a person. The similar issue came

before the Hon‟ble Supreme Court in the case of The Divisional Personnel

Officer, Southern Railway and Ors. Vs. T.R. Chellappan and Ors.: AIR

1975 SC 2216 whereby the Supreme Court held as under:-

"........... The words where any penalty is imposed in Rule 14(i) should actually be read as 'where any penalty is imposable', it because so far as the disciplinary authority is concerned it cannot impose a sentence. It could only impose a penalty on the basis of the conviction and sentence passed against the delinquent employee by a competent Court. Furthermore the Rule empowering the disciplinary authority to consider circumstances of the case and make such Orders as it deems fit clearly indicates that it is open to the disciplinary authority to impose any penalty as it likes. In this sense, therefore, the word 'penalty' used in Rule 14 (i) of the Rules of 1968 is relatable to the penalties to be imposed under the Rules rather than a penalty given by a criminal Court.

10. Another important aspect of the matter is that a criminal Court after conviction does not impose any penalty but passes a sentence whether it is one of fine, or

imprisonment or whipping or the like. The Penal Code has been on the statute book for a large number of years and the rule-making authority was fully aware of the significance of the words 'conviction' and 'sentence' and if it really intended to use the word 'penalty' as an equivalent for 'sentence', then it should have used the word 'sentence' and not 'penalty'..........."

7. Learned counsel appearing on behalf of the petitioner submits that the

respondent has not made any criminal complaint, thus, the petitioner has

never been prosecuted by any court of law and question of conviction does

not arise. It is submitted that no loss caused to the bank, therefore, the loss

has not been quantified. The petitioner has been compulsorily retired after

the departmental inquiry but allegation of moral turpitude has never been

levelled against the petitioner nor proved in the said departmental inquiry.

However, the impugned order dated 05.03.2016 passed by the disciplinary

authority has been confirmed by the appellate authority vide its order dated

18.10.2017.

8. In the counter affidavit filed by the respondent, it is stated that the

present petition is not maintainable as the appellate authority has passed the

reasoned order and has rightly come to the conclusion that forfeiture of

gratuity is in accordance with the provision of section 4 (6)(b)(ii) of the Act

as the acts of misconduct proved against the petitioner amount to moral

turpitude and has been punished by the disciplinary authority by way of

disciplinary proceedings and prior conviction by criminal court is not

mandated for invocation of section 4(6)(b)(ii) of the Act.

9. Learned counsel appearing on behalf of the respondent bank

submitted that the petitioner was working as Branch Manager at Mainpuri

Branch during the period between 03.11.2008 to 28.06.2011 and while

working there, he sanctioned various credit facilities to certain parties

without conducting due diligence such as not verifying the CIBIL report, not

obtaining confidential opinion from the existing bankers etc., without

assessing the requirement properly and without obtaining the required

details/documents and without conducting pre-sanction visits. The

petitioner sanctioned/enhanced credit facilities to clear the overdues in other

accounts of the parties and fresh loans have been sanctioned when the

existing loans were overdue/irregular. He failed to conduct proper post

sanction visit/follow up/monitoring. The petitioner in order to avoid

slippage in the said quality, transferred amounts held in the untallied

collection accounts to overdue/irregular loans and subsequently got credited

the amount back by debiting to the parties account thereby temporarily

misappropriated the amounts lying in the collection accounts. Accordingly,

the petitioner in this process violated the guidelines of the bank and undue

official favour was extended to the party‟s at the cost of the bank and the

bank was exposed to the risk of financial loss to the extent of ₹ 139.97 lakh.

Thus, the petitioner failed to take all possible steps at the time to ensure and

protect the interest of the bank and discharge duty with utmost dignity,

honesty and devotion and diligence and acted in a manner unbecoming of

an officer employee and thereby contravened regulation No.3(1) and

regulation No.24 of the Syndicate Bank Employees (Conduct) Regulations

1976.

10. He further submitted that conviction by a Trial Court and termination

or dismissal of the services is not required to forfeit the gratuity. The same

can be forfeited if the employee has committed an offence of moral

turpitude as is in the present case. The case mentioned above of the

petitioner is amount to moral turpitude.

11. To strengthen his argument, counsel for the respondent has relied

upon a judgment of Himachal Pradesh High Court in the case of Madan Lal

Sharma vs. H.P. Khadi and Village Industries Board: 2013 LAB.I.C. 1007

wherein in para 20 of the said judgment, it is held that according to section

4(6)(b)(ii) of the Payment of Gratuity Act, 1972, the gratuity payable to an

employee may be wholly or partially forfeited, 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. It is further observed that the expression

"misconduct" covers a large area of human conduct. On the one hand, the

habitual late attendance, habitual negligence and neglect of works: on the

other hand, riotous or disorderly behaviour during working hours at the

establishment or any act subversive of discipline, wilful insubordination or

disobedience. Misconduct falling under several of these latter heads of

misconduct may involve no direct loss or damage to the employer, but

would render the functioning of the establishment impossible or extremely

hazardous. Thus, learned counsel submits that in the present case, the case

of the petitioner constitutes the offence of moral turpitude.

12. Counsel for the respondent has also relied upon the judgment of this

Court in Food Corporation of India vs. UOI & Ors. in W.P.(C) 7350/2009

dated 03.08.2015 whereby it is held that the term „moral turpitude‟ is

somewhat vague by its very nature because it involves examination of an

action in the light of the existing moral norms. Unlike legal norms, moral

norms are somewhat unformulated. They can change from time to time,

from society to society and even from individual to individual. Hence, it is

quite possible that an action which may be violative of moral norms in one

society may appear acceptable to another. One can only judge the action in

any given case in the light of what one considers to be the prevailing moral

norms of the society in which such action has taken place. Accordingly,

held the gratuity was rightly forfeited.

13. I have heard the counsel for the parties.

14. In the case of Madan Lal Sharma (supra), the petitioner therein was

terminated from the services which is one of the ingredients of section 4

mentioned above.

15. In the case of Food Corporation of India (supra), huge recovery of

₹1,90,000/- was recovered out of gratuity amount and remaining amount of

₹1,94,000/- was paid to the employee. However, in the present case, neither

any recovery has been made from the petitioner nor terminated from the

services. Thus, the case relied upon by the respondent is not applicable in

the facts and circumstances of this case.

16. Thus, the opinion of the appellate authority is contrary to as has been

decided in case of Jaswant Singh Gill (supra) whereby it is held that the

amount liable to be forfeited would be only to the extent of damage caused.

In the case in hand, the disciplinary authority has not quantified the loss or

damage. The provisions contained in sub-clause 6 of Section 4 mentioned

above be scrupulously observed. Clause 6 of the section 4 speaks of

termination of service of employee for any act. However, the gratuity

amount liable to forfeit would be only to the extent of damage or loss

caused. In addition, if employee is convicted for moral turpitude or

terminated from service.

17. In the present case, admittedly, the petitioner has not been prosecuted

by any of the criminal court which has power to convict or punish the

accused. It is further admitted that no loss caused to the bank, therefore, not

quantified. Even in the charge, there is no allegation of moral turpitude,

thus, the opinion of the disciplinary authority and the appellate authority is

contrary to the view taken by the Hon‟ble Supreme Court in case of Jaswant

Singh Gill (supra) and T R Chellappan (supra).

18. In view of the above discussion and the settled law, I hereby set aside

the impugned order dated 18.10.2017 of the appellate authority vide which

the administrative order dated 05.03.2016 of respondent bank forfeited the

gratuity of the petitioner.

19. Consequently, I hereby restore the order dated 12.06.2017 of the

controlling authority.

20. In view of the above, the petition is, accordingly, allowed.

CM APPL. No.1854/2018

21. In view of the order passed in the present writ petition, this

application has been rendered infructuous and is, accordingly, disposed of

such.

(SURESH KUMAR KAIT) JUDGE FEBRUARY 13, 2019 ab