[Cites 6, Cited by 0]
Kerala High Court
The Pulpally Service Co-Operative Bank ... vs Thomas.P.U on 26 February, 2026
WA No. 498 of 2026
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2026:KER:16367
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE MR.JUSTICE SUSHRUT ARVIND DHARMADHIKARI
&
THE HONOURABLE MR.JUSTICE P. V. BALAKRISHNAN
THURSDAY, THE 26TH DAY OF FEBRUARY 2026 / 7TH PHALGUNA, 1947
WA NO. 498 OF 2026
AGAINST THE JUDGMENT DATED 07.07.2025 IN WP(C) NO.3611
OF 2023 OF HIGH COURT OF KERALA
APPELLANTS/RESPONDENTS 2 AND 3:
1 THE PULPALLY SERVICE CO-OPERATIVE BANK LTD.
NO.10153,
REPRESENTED BY ITS SECRETARY, PULPALLY P.O, WAYANAD
DISTRICT-PIN-673 579.
2 THE MANAGING COMMITTEE OF THE PULPALLY SERVICE CO-
OPERATIVE BANK LTD. NO.10153,
REPRESENTED BY ITS PRESIDENT, PULPALLY P.O, WAYANAD
DISTRICT-PIN-673 579.
BY ADV SHRI.P.U.SHAILAJAN
RESPONDENTS/PETITIONER AND RESPONDENT 1 AND 4:
1 THOMAS.P.U
AGED 62 YEARS
S/O.ULAHANNAN, AGED 62 YEARS, PAZHAYIDATH HOUSE,
CHETTAPPALAM P.O, PULPALLY, WAYANAD DISTRICT-PIN-
673 579.
2 THE JOINT REGISTRAR OF CO-OPERATIVE SOCIETIES
(GENERAL), WAYANAD,
OFFICE OF THE JOINT REGISTRAR OF CO-OPERATIVE
SOCIETIES (GENERAL), WAYANAD, KALPETTA-PIN-673 592.
3 THE LIFE INSURANCE CORPORATION OF INDIA
KOZHIKODE DIVISION, REPRESENTED BY ITS DIVISIONAL
MANAGER, DIVISIONAL OFFICE, JEEVAN PRAKASH, P B
NO:177, KOZHIKODE-673 001.
ADV.T.R.HARIKUMAR
ADV.ARJUN RAGHAVAN
ADV.SUNIL KURIAKOSE
THIS WRIT APPEAL HAVING BEEN FINALLY HEARD ON
23.02.2026, THE COURT ON 26.2.2026 DELIVERED THE FOLLOWING:
WA No. 498 of 2026
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2026:KER:16367
SUSHRUT ARVIND DHARMADHIKARI,
&
P.V.BALAKRISHNAN,JJ.
-------------------------------------
W.A. No.498 of 2026
---------------------------------
Dated this the 26th day of February 2026
JUDGMENT
P.V.BALAKRISHNAN,J
This intra-court appeal is filed by respondents 2 and 3 in
WP(C) No.3611 of 2023, challenging the judgment dated
07.07.2025, passed by the learned Single Judge, allowing the writ
petition filed by the first respondent herein.
2. The first respondent herein/writ petitioner entered the
service of the appellants, as Salesman on 5.5.1987 and while
working as Internal Auditor, retired on 31.10.2018. While so, the
Joint Registrar of the Co-operative Societies issued an order of
enquiry under Section 65 of the Kerala Co-operative Societies
Act(hereinafter referred to as 'the Act' for short) on 20.7.2017 and
the report was filed on 17.7.2018. Thereafter, the Joint Registrar
issued a proceeding under Section 68(1) of the Act on 8.11.2018
and a report was filed on 30.8.2019. On that basis, the first
respondent was issued Ext.P1 notice dated 31.12.2019, by the
Joint Registrar, stating that a loss of Rs.7,28,95,121/- has been
caused to the Society by him and the other managing committee
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members by sanctioning and disbursing loans to various persons
without submitting sufficient security and he submitted Ext.P2
explanation. While so, since the 1st respondent did not receive the
retirement benefits, he filed Ext.P3 representation dated 16.5.2019
before the part-time Administrator and Ext.P4 representation
before the Joint Registrar. But the Joint Registrar issued Ext.P5
communication stating that the amount can be disbursed only after
the completion of the Section 68 (1) proceedings. Aggrieved by
Ext.P5, the first respondent filed W.P.(C)No.2139/2020 and this
court disposed of the same as per Ext.P6 judgment, directing the
bank to consider the question of disbursement of gratuity within a
time frame. But the same was again rejected by Ext.P8, dated
20.7.2022. It is challenging Ext.P8 order, the first respondent filed
the afore writ petition.
3. The learned Single Judge after considering the materialas
on record and hearing both sides, by judgment dated 7.7.2025
allowed the writ petition and directed the appellants to release the
gratuity amount payable to the first respondent, with statutory
interest.
4. Heard Adv.P.U.Shailajan, the learned counsel appearing for
the appellants and Adv. T.R.Harikumar, represented by Adv.Arjun
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2026:KER:16367
Raghavan, the learned counsel appearing for the first respondent.
5. The learned counsel for the appellants contended that the
learned single judge has, without appreciating the facts of the case
in a proper perspective, wrongly allowed the writ petition. He
submitted that there is a specific finding against the first
respondent that he has misappropriated an amount of
Rs.1,81,39,099/- and that even though an order was issued by the
Joint Registrar under Section 66(B) of the Act to suspend the first
respondent with immediate effect, the Board of Directors in
collusion with the first respondent, did not comply with the order or
take disciplinary action against him. He further submitted that the
afore act of the first respondent and the Board of Directors, is
nothing but fraud to defeat the ends of justice and since fraud
nullifies all acts, the 1st respondent is not entitled to the benefits as
sought for. He further contended that, if the first respondent was
suspended and disciplinary action taken timely, it would have
ended in his termination, disentitling him for gratuity.
6. Per contra, the learned counsel for the first respondent
supported the impugned judgment and contended that there are no
grounds to interfere with the same. He submitted that the first
respondent was neither suspended nor had any disciplinary
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proceedings initiated against him and he had retired from service
on 31.10.2018. He also, by relying on the decision of this Court in
Annamma Mathew v. Managing Committee of the Mavelikara
Taluk Co-operative Bank Ltd. and Others [ILR 2024 (4) Ker
328], contended that as per Section 4(6) of the Payment of
Gratuity Act, 1972, gratuity can be forfeited only in cases where
the service of the employee has been terminated.
7. The short question to be considered in this writ appeal is
whether the gratuity amount due to the first respondent can be
withheld by the appellants, for the reason that there is a surcharge
proceeding pending against him for recovery of amounts he has
allegedly misappropriated. In the instant case, it is an admitted fact
that the first respondent has retired from service on 31.10.2018
and that there was no disciplinary proceedings initiated against him
at any point of time. This in turn means that there is also no order
of termination passed against him till date. Section 4 (6) of the
Payment of Gratuity Act reads as follows:
"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;
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(b) the gratuity payable to an employee 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."
8. Going by the afore section, it is very clear that gratuity of
an employee can be forfeited only if an employee has been
terminated from service, on the grounds stated therein. As stated
earlier, since in the instant case, there is no order of termination
passed against the first respondent, there is no question of the
appellants withholding the gratuity due to the first respondent. This
Court in decisions in Annamma Mathew's case (cited supra) and
Mohanan Nair P.G. v. Omallur Service Co-operative Bank Ltd.
and others [ILR 2022 (2) Ker. 1123] has also considered the
afore question and has categorically held that the gratuity of an
employee, who has retired from service on attaining the age of
superannuation, cannot be withheld solely, on the ground that an
order of surcharge has been passed against him, without passing
an order of termination against him.
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In the light of the afore discussions, we find no ground to
interfere with the impugned judgment passed by the learned single
judge. Therefore, this writ appeal lacks merit and the same is
accordingly dismissed. The appellants are granted one month time
from today to comply with the direction issued by the learned
single judge.
Sd/-
SUSHRUT ARVIND DHARMADHIKARI
Judge
Sd/-
P.V.BALAKRISHNAN
Judge
dpk
