Delhi High Court
Syndicate Bank vs Surendra on 10 May, 2019
$~28
* IN THE HIGH COURT OF DELHI AT NEW DELHI
% Date of Judgment: 10th May, 2019
+ LPA 324/2019
SYNDICATE BANK ..... Appellant
Through: Mr. Puneet Taneja, Mr. Rajesh
Mahindru, Mr. Manmohan Singh
Narula and Mr. Sarabjeet Singh,
Advocates
versus
SURENDRA ..... Respondent
Through: None
CORAM:
HON'BLE MR. JUSTICE G.S. SISTANI
HON'BLE MS. JUSTICE JYOTI SINGH
G.S. SISTANI, J. (ORAL)
C.M.22475/2019 (Exemption)
Allowed subject to all just exceptions.
C.M.22477/2019 (delay)
There is delay of 34 days in filing the accompanying appeal.
For the reasons stated in the application, the delay is condoned and the
application is disposed of.
LPA 324/2019
1. The appellant-Bank is aggrieved by the order dated 13 th February,
2019 passed by a learned Single Judge of this Court in a writ petition filed
by the employee assailing the order dated 18 th October, 2017 passed by the
appellate authority constituted under the Payment of Gratuity Act, 1972
(hereinafter referred to as „the Gratuity Act‟). The appellate authority has
upheld the administrative order dated 5th March, 2016 passed by the
appellant-Bank.
2. Some necessary facts which are required to be noticed for disposal of
this appeal at the admission stage itself are that the respondent joined the
services of the appellant-Bank on 21st August, 1982. He worked in various
branches/offices of the Bank. An order of compulsory retirement was
passed after he had put in 33 years and 2 months of continuous service. The
respondent was served with a charge-sheet on 3rd November, 2014 and an
inquiry was conducted into the matter. The disciplinary authority vide its
order dated 6th October, 2015 imposed the punishment of „compulsory
retirement‟ from services of the Bank. Post the passing of this order, a
notice to show-cause dated 23rd December, 2015 was issued to the
respondent as to why his gratuity be not forfeited. Being dissatisfied with
the response of the respondent, an order dated 5 th March, 2016 was passed
forfeiting the gratuity of the respondent. The administrative order, as
noticed above, was upheld by the appellate authority. However, learned
Single Judge has allowed the writ petition of the employee and set aside the
order of the appellate authority and also the administrative order.
3. Mr. Taneja, learned counsel appearing for the Bank, submits that
learned Single Judge has failed to take into account the nature of charge
against the respondent. He contends that on account of the acts of the
employee, his services were in fact terminated or put to an end as he was
awarded the punishment of compulsory retirement. He submits that learned
Single Judge has failed to take note of the fact that the word „termination‟
has to be given a broader meaning and also that after inquiry, the said
punishment was awarded. In view of the nature of allegations, which stood
proved, the respondent became disentitled to the benefits under the Gratuity
Act. Strong reliance is placed by Mr. Taneja on Section 4(6)(b)(ii) of the
Gratuity Act. While drawing the attention of this Court to the charge-sheet,
Mr. Taneja has strongly urged before us that the services of the respondent
were in fact terminated for the offence involving „moral turpitude‟ and such
offence was committed by him during the course of his employment.
4. Mr. Taneja submits that the judgment in the case of Jaswant Singh
Gill v. Bharat Coking Coal Ltd. and Ors, reported at 2007 (4) ALT 23
(SC), relied upon by learned Single Judge would not apply to the facts of the
present case, as in the said case, Jaswant Singh Gill had retired and post his
retirement, proceedings were sought to be initiated and it is in that context,
that the judgment was delivered. He submits that in fact his case would be
fully covered by a decision of the Madras High Court in the case of
Suganthi Gomez v. UCO Bank Regional Office & Ors., reported at 2018
LawSuit (Mad) 3904. Mr. Taneja has relied upon paragraphs No.12, 13, 14,
16 & 17 of this judgment, which we reproduce below: -
"12. A reading of Sub Section (6) of Section 4 of the Act
shows that the employer has the power to forfeit the gratuity of
an employee fully or partly 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 or her, in the course of its employment. So
the essential conditions that must we shown to exist are a
termination of service and the termination should have been
for an act which constitutes an offence involving moral
turpitude. If these two ingredients are shown to exist then the
employer undoubtedly has the power to forfeit the gratuity of
the delinquent employee. The contention of the learned counsel
appearing for the appellant in this regard are two fold, the
first part of his contention is that there has been no
termination of the services on the other hand the punishment
imposed on the employee is one of compulsory retirement and
secondly, the proved charges do not amount to have an act
which constitutes an offence involving moral turpitude on the
part of the delinquent employee.
13. We have been taken through the charges that are
framed and the conclusions of the Disciplinary Authority. As
rightly pointed out by the learned Single Judge, the charges
particularly the allegations 9 and 10 which have been
extracted by the learned Single Judge would definitely show a
dishonest intention on the part of the official to unjustly enrich
himself. We are of the considered opinion that these acts
coupled with the other charges which also show that the
delinquent official had appropriated funds of the customers
without Authority and had issued fake authorization slips
particularly when he was on leave would definitely show that
the delinquencies are in the nature offences involving moral
turpitude. The term Moral Turpitude according to Black's Law
Dictionary means Conduct that is contrary to Justice, honesty
or morality. At no stretch of imagination can it be said that the
proved charges in this case do not amount to an offence
involving Moral Turpitude. We are therefore unable to accept
the contention of the learned counsel for the appellant that the
proved charges do not amount to act which constitutes an
offence involving moral turpitude within a meaning of Section
4(6)(b)(ii).
14. The next contention of the learned counsel for the
appellant is that unless it is shown that there was a valid order
of termination of the service of the delinquent employee, the
employer had no power to invoke Section 4(6) of the Act to
forfeit the gratuity. Of course, Section 4(6) uses the word
terminated as a condition precedent to enable the employer to
forfeit the gratuity payable to an employee. The question that
would arise is as to the meaning that should be given to the
word terminated in the context it is used. The words
termination or terminated has not been defined in the Payment
of Gratuity Act, but Section 4(1) which has been extracted
above shows that gratuity is payable to an employee on
termination of his employment after he has rendered a
continuous service of five years
(a) on his superannuation, or
(b) on his retirement or resignation, or
(c) on his death or disablement due to accident or
disease:
15. Clauses (a) and (c) do not stand attracted in the case
on hand. Clause (b) makes gratuity payable to an employee on
his retirement or resignation. Section 2(q) of the Payment of
Gratuity Act, 1972, defines the word retirement as termination
of service of an employee otherwise than on superannuation,
therefore, a termination of the service of an employee
otherwise than on superannuation would amount to retirement
under the Act. While considering the scope of the definition of
the word retirement defined under Section 2(q) of the Payment
of Gratuity Act, the Honble Supreme Court in State of Punjab
v. The Labour Court, Jullundur and others, reported in AIR
1979 SCC 1981, had observed as follows:
"4. The second contention on behalf of the
appellant is that retrenchment does not fall
within section 4(1) of the Payment of Gratuity Act,
under which gratuity is payable to an employee on
the termination of his employment. The termination
envisaged occurs either
"(a) on his superannuation, or
(b) on his retirement or resignation, or
(c) on his death or disablement due to accident
or disease."
5. Having regard to the definition of
"superannuation" in Section 2(r) of the Act, it is
clear that the case is not one under clause (a). Nor,
admittedly, is it a case which falls under clause (c).
As regards clause (b), it is not a case of resignation.
The only question is whether it can be regarded
under clause (b) as a case of retirement. The
expression "retirement" has been defined by Section
2(q) to mean "termination of the service of an
employee otherwise than on superannuation." The
definition is framed in the widest terms. Except for
superannuation, any termination of service would
amount to "retirement" for the purposes of the Act.
Retrenchment is a termination of service. It is
immaterial that the termination is occasioned by the
need to discharge surplus labour".."
16. From the above observations of the Hon‟ble Supreme
Court it could be gathered that compulsory retirement would
also amount to retirement within a meaning of Section 2(q) of
the Act. The word terminated has been defined in
P.Ramanatha Aiyar‟s Advanced Law Lexicon as "Brought or
come to a close" in Black‟s Law Dictionary, the word
terminate has been defined as "To put an end to; to bring to
an end" and the word termination is shown to mean "The act
of ending something"
The order of compulsory retirement passed by the Bank
on 28.09.2006 undoubtedly puts an end to the employer-
employee relationship between the delinquent official
(husband of the appellant) and the Bank. Therefore, we are in
entire agreement with the learned Single Judge, when he
disagreed with the authorities under the Act and held that the
word termination need not necessarily be a termination per se.
As pointed out by the Honble Supreme Court in State of
Punjab v. The Labour Court, Jullundur and others, cited
supra, the definition of the word retirement under Section
2(q) of the Act is in the widest possible amplitude and would
taken within its sweep any form or mode of termination of
service.
17. We are therefore unable to countenance the
contention of the learned counsel for the appellant that the
word termination used in Section 4(6) should be given a
restricted meaning. In our considered opinion the word
terminated used in Section 4(6) would mean and include any
act by which the employer or the employee puts an end to the
contract of an employment. We therefore see no reason to
interfere with the judgment of the learned Single Judge. We
find that the learned Single Judge has been magnanimous in
allowing the appellant to withdraw a further sum of
Rs.62,500/- and the Bank has also been charitable in not
challenging the order of the learned Single Judge. For the
foregoing reasons, the Writ Appeal is dismissed. However
there will be no order as to costs."
5. Mr. Taneja has also relied upon a decision of the Himachal Pradesh
High Court in the case of Madan Lal Sharma v. H.P.Khadi and Village
Industries Board, reported at 2013 LAB. I.C. 1007. Paragraphs No.2, 3, 19,
20 & 25 of this judgment are reproduced below: -
"2. Mr. Ashwani K. Sharma, learned counsel for the
appellant has vehemently argued that the petitioner has not
admitted his charges and he has only explained the same. He
then contended that a regular inquiry should have been held on
the basis of charge-sheet dated 29.4.1995. He then contended
that his client has been acquitted by the learned Chief Judicial
Magistrate, Hamirpur in criminal case on 19.6.2004 and in these
circumstances, the dismissal order is liable to be set aside. He
also argued in the alternative that the gratuity of the petitioner
could not be withheld.
3. Ms. Rita Goswami, learned counsel for the respondent
has supported the judgment dated 24.2.2009 passed by the
learned single Judge.
19. Now, we will advert to the plea raised by Mr. Ashwani
K. Sharma, learned counsel for the appellant that the gratuity of
the petitioner could not be forfeited.
20. 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.
25. In the instant case, since the petitioner has committed‟
grave misconduct of embezzlement, he cannot be granted
gratuity."
6. Reliance is also placed by Mr. Taneja on a judgment rendered by
learned Single Judge of the Calcutta High Court in the case of Indian Iron
and Steel Company Ltd. v. Himangshu Bikash Sarkar and others,
reported at (2006) 3 CHN 469. Paragraph No.19 of the said judgment is as
under: -
"19. I would think that anything which is disagreeable
to conscience is immoral. An act or omission which is
disagreeable to conscience is not always an offence
punishable by law. It can hardly be disputed that a riotous or
disorderly conduct or any act of violence is also an offence
and the Legislature was fully conscious about it. A distinction
has nonetheless been made between an offence and an
offence involving moral turpitude. For instance a case of
strict liability does not involve any moral turpitude. An
unintended violation of traffic rule is punishable offence
although even the element of mens rea may be missing. It is
also comparable with the case of manslaughter. All
manslaughters are not murders in the eyes of law. A
distinction has been made by Ss. 302 and 304 of I.P.C. I am
inclined to think that the true distinction lies in finding out
whether the act or omission was just an instance of
inadvertence or an error of judgment or whether it was a
well-planned deliberate act. In all those cases where the act
or omission is both immoral and deliberate one can say
without hesitation that it is a case of moral turpitude covered
by Sub-cl. (ii) of Cl. (b). A conviction by a criminal Court of
competent jurisdiction is not required for the purpose of
forfeiting gratuity either under Sub-cl. (i) or under Sub-
cl. (ii) of Cl. (b) of Sub-sec. 6 of S. 4 of the Act. One of the
objects sought to be achieved by all industrial legislations is
to secure industrial peace. Peace without fear is hardly
possible. Therefore, that construction should be given to a
statue which is conducive to the object sought to be achieved.
It is not proper to import something which the Legislature
did not provide. Conviction by a Court of Criminal
jurisdiction is not required by the section. To insist upon that
not provided by law is sheer obstinacy. A fear, about a loss to
which a person may be exposed, in general is a deterrent.
The policy is to deter a person from committing an act or
omission which amounts to an act or omission of moral
turpitude and not to encourage him to resort to any such
thing by pedantic interpretation of law."
7. We have heard Mr. Taneja, learned counsel appearing for the
appellant-Bank, and carefully examined the order passed by learned Single
Judge. In this case, a charge-sheet was issued to the respondent, copy
whereof has been placed on record. The disciplinary authority passed the
order of compulsory retirement against the respondent. As per the charge-
sheet, the main allegation against the respondent was that he had sanctioned
various credit facilities without conducting due diligence; he had sanctioned
enhanced credit facilities to clear the over-dues in other accounts; fresh
loans were sanctioned; shown undue favours; exposed the Bank to the risk
of financial loss and had failed to take all possible steps at all time to ensure
and protect the interest of the Bank.
8. We may note at the outset that there is no finding that any actual loss
was suffered by the Bank. Consequently, there is no order for recovery from
the respondent. We may also note that from the order of the disciplinary
authority and the appellate authority, Mr. Taneja has not been able to point
out, that any observation has been made that the conduct of the respondent
amounted to moral turpitude. Mr. Taneja has, however, submitted that
when the show-cause notice was issued, the words „moral turpitude‟ had
been used and it was mentioned that respondent had perpetuated fraud and
misappropriated funds of the Bank/ customers during the course of his
employment, which amounted to moral turpitude. No doubt, such words
have been used in the show-cause notice dated 23rd December, 2015,
however, nothing has been brought to the notice of this Court that a finding
of perpetuated fraud and misappropriation of funds has been given by the
Enquiry Officer. If there is no finding in the report of the inquiry officer or
in the findings of the disciplinary authority and appellate authority, loosely
using these words in the show-cause notice would have no bearing. We find
that the observations of the Supreme Court in the case of Jaswant Singh
Gill (supra) are useful in this matter as also the observations in the case of
the Divisional Personnel Officer, Southern Railway and Ors. Vs. T.R.
Chellappan and Ors, reported at AIR 1975 SC 2216. Both the observations
we reproduce below: -
"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, subsection (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."
......
......
".........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‟........"
9. Section 4(6) of the Gratuity Act, which we reproduce below, deals
with the situation where an employer can forfeit the gratuity: -
"4 Payment of gratuity. --
xxxxx
xxxxx
(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."
10. Section 6(a) of the Gratuity Act is with respect to an employee, whose
services have been terminated for any act of wilful omission or negligence,
causing any damage or loss or destruction of property belonging to the
employer. No such ground is made out and thus, Section 6(a) would not
apply. Section 4(6)(b)(1) of the Gratuity Act is with respect to withholding
partly or the entire gratuity, if the services of an employee has been
terminated for his riotous or disorderly conduct or any other act of violence,
which conduct has not been canvassed before us.
11. Mr. Taneja submits that his case would fall under Section 4(6)(b)(ii)
of the Gratuity Act as the services of the respondent have been terminated
for an act which constitutes an offence of moral turpitude and this offence
was committed by him during the course of his employment. We are unable
to accept the submission of learned counsel as, firstly, there is nothing on
record to show as to what stopped the appellant-Bank from dismissing the
services of the employee and why the Bank considered it appropriate to pass
an order of compulsory retirement. If the stand of the Bank is to be believed
that the employee had perpetuated fraud and further, he had misappropriated
the funds of the Bank and customers, why an amount was not quantified and
why recoveries were not sought and why a complaint was not made to the
police for registration of an FIR.
12. We also find that there is no clear-cut finding pertaining to moral
turpitude. The Bank has not been able to show any damage suffered by the
Bank. To argue that the word „termination‟ is to be given a broad meaning
and compulsory retirement would be covered under „termination‟, if
accepted would mean that any form/mode by which the services of
employee come to an end, even by voluntary retirement or superannuation
would amount to termination and in such cases as well, there would be
forfeiture of gratuity. The broader meaning is to be given in the facts of the
relevant cases.
13. The learned counsel for appellant has relied on the judgment of
Madras High Court Suganthi Gomes (supra) to contend the word
"termination" cannot be given a restricted meaning and in the context of
Section 4(6) of the Act, it would mean and include any mode by which a
contract of employment is put to end. We cannot persuade ourselves to
agree with this view. If we were to subscribe to this view then even
superannuation would be termination and read in the context of section 4(6)
the gratuity could be forfeited. In our view, the word "termination" would
have to be interpreted in the context and for the purpose it appears in
Section 4(6). Section 4(6) is in the nature of a penal provision. While
Section 4(1) of the Act deals with entitlement to gratuity, Section 4(6) deals
with forfeiture of the gratuity in whole or in part. The words used by the
legislature in this sub-section 6 of Section 4 are indicators that termination
would have to be read to mean termination as a penalty. When we look at
this word in the context of a penalty, the only interpretation that can be
given, in our opinion, is termination by way of removal or dismissal. Any
lesser degree of penalty would not amount to termination under Section
4(6). In the present case, the penalty involved is compulsory retirement
with no allegations of moral turpitude, bribe, fraud or misappropriation. For
a finding of moral turpitude, intent is essential. The appellants have not
even alleged any loss to the bank and therefore, there is neither any
quantification of loss or damage nor a recovery. The compulsory
retirement, therefore, in the present case will not amount to termination for
an offence amounting to „moral turpitude‟. The ingredients of Section
4(6)(b)(ii) are not fulfilled in the present case and the judgment of the
Madras High Court, therefore, does not help the appellant.
14. The judgment of the Calcutta High Court relied upon by the learned
counsel for the appellant also would not apply to the present case as in that
case, there was a clear finding of „moral turpitude‟ against the employee,
while there is no such finding in the present case against the respondent.
15. Resultantly, we find no infirmity in the view taken by learned Single
Judge. No grounds are made out to entertain the appeal. The appeal is
accordingly dismissed. Let the payment be released in favour of the
respondent within a period of four weeks from today.
C.M.22476/2019 (stay)
The application also stands dismissed in view of the order passed in
the appeal.
G.S.SISTANI, J
JYOTI SINGH, J
MAY 10, 2019
s
