The Zonal Manager vs Shri Prem Narayan Sharma
2021 Latest Caselaw 4583 MP

                                                         1                               WP-3617-2016
                              The High Court Of Madhya Pradesh
                                         WP-3617-2016
                                       (THE ZONAL MANAGER Vs SHRI PREM NARAYAN SHARMA)


                      Jabalpur, Dated : 24-08-2021
                            Heard through Video Conferencing.

                            Shri Arvind Kumar Pandey, learned counsel for petitioner.
                            Shri Tej Kumar Malik, learned counsel for respondent.

Petitioner has filed this writ petition challenging order dated 05.01.2014 contained in Annexure-P/3 and order dated 25.08.2015 contained in

Annexure-P/5.

2. Controlling Authority under Payment of Gratuity Act, 1972 has passed order dated 05.01.2014 by which application filed by respondent namely Prem Narayan Sharma under Section 7 of Payment of Gratuity Act read with Rule 10 of Payment of Gratuity Central Rules was allowed. Petitioner was directed to pay an amount of Rs.10,00,000/- along with 10% simple interest to respondent from 16.03.2012 till date of payment. Order passed by Controlling Authority under Payment of Gratuity Act, 1972 (hereinafter referred to as "P.G. Act, 1972") was challenged by petitioner in

appeal. Appellate Authority vide its order dated 25.08.2015 affirmed the order passed by Controlling Authority. Appellate Authority held that Regulation framed by Bank will not created any impediment against the right of receiving gratuity under the P.G. Act, 1972. It was also held that no final order has been issued by the Bank forfeiting the gratuity amount of employee. In absence of final order forfeiting the gratuity under Section 4(6) of the Act, withholding the gratuity or non-payment of gratuity is not tenable. It was also held that natural justice was not followed by the Bank and Bank has illegally withheld the gratuity payment without following the prescribed procedure. Section 13 of P.G. Act, 1972 was also relied upon and held that gratuity payable to an employee is not liable to attachment in execution of any decree or order of any civil court.

Signature Not SAN Verified 3. Petitioner has challenged the order passed by Controlling Authority Digitally signed by SUNIL KUMAR PATEL Date: 2021.08.27 17:15:12 IST 2 WP-3617-2016 and Appellate Authority on the ground that person who is dismissed from service is only entitled to get provident fund but not gratuity amount. Reliance is placed by petitioner in judgment reported in (2006) 5 SCC 377 (V.P. Sarabhai Vs. Union of India).

4. Counsel appearing for petitioner argued that learned Controlling

Authority and Appellate Authority committed an error of law in wrongly interpreting Section 4(6) (1) (b) (ii) of P.G. Act, 1972. It is submitted that notice dated 07.08.2013 was issued invoking Section 4(6)(1)(b)(ii) of P.G. Act, 1972 when respondent filed an application under Section 7 of Payment of Gratuity Act and same cannot be treated as nonest. No notice for forfeiture is required to be given to an employee as per Section 4(6) (1)(b) (ii) of P.G. Act, 1972.

5. Counsel appearing for petitioner relied on Central Bank of India (Officers') Service Regulations, 1979. Regulation 46 and Section 4(6) (1) (b)

(ii) of P.G. Act, 1972 are quoted as under:-

"REGULATION :46 - GRATUITY

(1) Every officer, shall be eligible for gratuity on:-

a) retirement

b) death

c) disablement rendering him unfit for further service as certified by a Medical Officer approved by the bank;

d) resignation after completing ten years of continuous service; or

e) termination of service in any other way except by way of punishment after completion of 10 year of service.

(2) The amount of Gratuity payable to an officer shall be one month's pay for every completed year of service, subject to a maximum of 15 months pay.

Provided that where an officer has completed more than 30 years of service, he shall be eligible by way of Gratuity for an additional amount at the rate of one half of a month's pay for each completed year of service Signature SAN Verified Not beyond 30 years.

Digitally signed by SUNIL KUMAR PATEL Date: 2021.08.27 17:15:12 IST 3 WP-3617-2016 Provided further that pay for the purpose of Gratuity for an officer who ceases to be in service during the period 1/7/1993 to 31/10/1994 shall be with regard to scale of pay as specified in sub-regulation (1) of regulation 4.

Section 4(6) (1) (b) (ii) of Payment of Gratuity Act, 1972:-

4. Payment of gratuity-

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

(a) the gratuity of an employee, whose services have been terminated for any act, willful 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 w h i c h constitutes an offence involving moral turpitude, provided that such offence is committed by him in the course of his employment."

(emphasis supplied)

6. On basis of aforesaid submission, counsel appearing for petitioner prayed for quashing of orders dated 05.01.2014 and 25.08.2015.

7. Counsel appearing for respondent submitted that Controlling Authority and Appellate Authority have rightly decided the application filed by respondent under Section 7 of P.G. Act, 1972. Counsel for respondent relied on judgment reported in Parmali Wallace Ltd. Vs. State of M.P. and others; 1996 MPLJ 262, Bharat Gold Mines Ltd. Vs. Regional Labour Commissioner, Equivalent citations: ILR 1986 KAR 2755 and Zonal Signature SAN Not Verified Manager, Central Bank of India Vs. R.R. Das passed in W.P. Digitally signed by SUNIL KUMAR PATEL Date: 2021.08.27 17:15:12 IST 4 WP-3617-2016

No.6551/2013 vide order dated 28.11.2013.

8. On basis of aforesaid judgments, counsel appearing for respondent averred that no notice was given to petitioner and no final order was passed forfeiting the gratuity amount. In absence of notice, petitioner wrongly withheld the gratuity amount. It is submitted that Appellate Court has rightly held that gratuity amount was wrongly withheld without any order of forfeiture. Payment of Gratuity Act will override the Banking Regulation. It is further argued that reliance was rightly placed by Controlling Authority and Appellate Authority under Sections 13 and 14 of Payment of Gratuity Act, 1972.

9. Heard the counsel for petitioner as well as respondent.

10. Question before this Court is whether Bank can forfeit the gratuity amount on conviction of respondent? The issue has been settled by Apex Court in case of Union Bank of India Vs. C.G. Ajay Babu (2018) 9 SCC 5 2 9 and in case of Jaswant Singh Gill Vs. Bharat Coking Coal Ltd., (2007) 1 SCC 663. Apex Court in said cases held that Section 4(6) of Payment of Gratuity Act, 1972 contains a non obstante clause vis-a-vis sub- section (1). As a reason thereof, an accrued or vested right is sought to be taken away, therefore, conditions laid down in Section 4(6) of P.G. Act, 1972 for taking away such right must be fulfilled. Provisions contained in Section 4 (6) of P.G. Act, 1972 must be scrupulously observed and followed. It was held that as per Section 4(6) of P.G. Act, 1972 forfeiture of gratuity is permissible only if the termination of an employee is for any misconduct which constitutes an offence involving moral turpitude and such employee is convicted accordingly by a court of competent jurisdiction.

11. In the present case, respondent was convicted by C.B.I. Court of Second Additional District & Sessions Judge, Bhopal in Special Case No.SPL/10/2005 and was awarded punishment of 1 year rigorous imprisonment and fine of Rs.2,000/- along with 6 months imprisonment in

Signature SAN Not default of fine. As respondent has been convicted for an offence of moral Verified

Digitally signed by SUNIL KUMAR PATEL Date: 2021.08.27 17:15:12 IST 5 WP-3617-2016 turpitude by Court of Competent Jurisdiction and his services has been terminated, therefore, forfeiture of gratuity amount is permissible under P.G. Act, 1972 and circumstances of case satisfy rigour of Section 4(6) of P.G. Act, 1972. But in this case no order has been passed by Bank forfeiting the gratuity amount. In absence of order of forfeiture of gratuity, petitioner Bank cannot withhold the gratuity amount of respondent. Appellate Authority has rightly held that no final order forfeiting the gratuity amount of the employee has been passed. Only a notice has been issued to petitioner, that too after filing an application under Section 7 of P.G. Act, 1972 on 07.08.2013 giving 7 days time to respondent to show cause why gratuity amount cannot be forfeited under Section 4(6) of P.G. Act, 1972. As per Banks Regulations, a final order in Form- Annexure-B has to be issued to the employee giving reasons as to why gratuity amount has been forfeited. Appellate Authority has reproduced the format of order in Annexure-B in its order dated 25.08.2015.

12. In view of aforesaid facts and circumstances of the case, since there is no order passed by Bank for forfeiting the gratuity amount of respondent, therefore, Bank cannot withhold the gratuity of respondent and notice dated 07.08.2013 cannot be treated as final forfeiting the gratuity amount of respondent.

13. According, writ petition filed by petitioner is dismissed.

(VISHAL DHAGAT) JUDGE

sp/-

Signature
 SAN      Not
Verified

Digitally signed by
SUNIL KUMAR
PATEL
Date: 2021.08.27
17:15:12 IST