Telangana High Court
The Chairman And Managing Director vs K.V.Subramanyam on 27 June, 2025
Author: Nagesh Bheemapaka
Bench: Nagesh Bheemapaka
HON'BLE SRI JUSTICE NAGESH BHEEMAPAKA
WRIT PETITION No. 23409 OF 2016
O R D E R:
This Writ Petition is filed aggrieved by the order
dated 10.03.2016 in Appeal No. 36/07/2015-E1 passed by the
3rd Respondent (Appellate Authority under Payment of Gratuity
Act) dismissing the Appeal and confirming the order dated
17.11.2014 in P.G. Application No.48 of 2013 passed by the 2nd
respondent (Controlling Authority under Payment of Gratuity
Act) and directing petitioner - Syndicate Bank to pay gratuity of
Rs. 9,92,935/- along with interest at Rs.3,97,174/- i.e. total
amount of Rs.13,90,109/- to the 1st respondent.
2. The brief case of petitioner bank is that the 1st
respondent, who worked in the Officer Cadre in their bank filed
an Application claiming gratuity on 29.05.2013 on the ground
that though he retired from service on 31.08.2010 on attaining
the age of superannuation, the bank served a charge sheet and
pending completion of inquiry, withheld retirement benefits and
after completion of disciplinary enquiry he was dismissed from
service vide order of punishment dated 10.01.2012, hence, he is
eligible for gratuity under the Payment of Gratuity Act, 1972 (for
short, 'the Act'), but it was not paid. The 1st respondent filed
Writ Petition No. 29660 of 2012 assailing the penalty imposed
under Syndicate Bank Officer Employees' (Discipline & Appeal)
Regulations, 1976 and the order dated 11.07.2012 of the
Appellate Authority confirming the punishment. This Court vide
order dated 23.08.2022 allowed the said Writ Petition, modifying
the punishment of dismissal from service to stoppage of two
increments without cumulative effect which fall due after the
date of issuance of charge sheet and consequently, the bank
was directed to pay all terminal benefits to petitioner in
accordance with Rules. Aggrieved by the said order, the bank
preferred Writ Appeal Nol. 769 of 2022, wherein the Division
Bench by order dated 19.09.2023 remanded the matter to the
bank to impose any other punishment other than dismissal/
removal against the respondent duly taking into consideration
the fact that the latter rendered 36 years of service in the
appellant bank and he was involved in solitary charge in his
entire career. Challenging the said order, the bank filed SLP
(C)No. 28162 of 2023 which was dismissed by the Hon'ble
Supreme Court.
In due obedience to the order in the Writ Appeal,
the Disciplinary authority passed revised punishment order
dated 23.01.2024 imposing the punishment of compulsory
retirement as envisaged under Regulation 4(h) of Canara Bank
Officer Employees' (Discipline and Appeal) Regulations, 1976.
The Disciplinary Authority has also given finding that though
the accounts are settled under OTS/written off, the bank is still
exposed to financial loss of Rs.44.64 lacs due to his gross
misconduct. The said order is not questioned till now. However,
the employee preferred Writ Petition No. 9134 of 2024 assailing
the inaction of respondents in releasing the retirement benefits
subsequent to issuance of order dated 23.01.2024 by the 4th
respondent therein.
The 1st respondent filed counter stating that
Regulation 46(1) of Service Regulations which deals with
eligibility of an officer to receive gratuity as per internal rules of
the bank; his claim for gratuity is not based on the service
Regulations but as per the Payment of Gratuity Act. According
to this respondent, the benefit of gratuity is a terminal benefit
eligible to all retired employees. He was allowed to retire on the
due date of superannuation, but his terminal benefits were
withheld pending completion of disciplinary case. The inquiry
continued thereafter and penalty order was issued by the
disciplinary authority on 10.01.2012; forfeiture of gratuity either
towards recovery of loss or on account of alleged offences
involving moral turpitude as part of the penalty if awarded have
to be specified by the disciplinary authority. Section 4(6)(b)(ii)
specifies discretionary powers of forfeiture has to be on account
of termination of employment on account of 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 the legal obligation on the part of Inquiry and
Disciplinary authority under Section 4(6)(b)(ii) not only to
specify the offence as ground of dismissal and also to explain
how it constitutes an offence of moral turpitudes be eligible to
seek powers to forfeit gratuity. As per Section 8(1) of the Act, the
bank had to issue notice in Form-M to the employee, if the claim
for gratuity is not found admissible specifying the reasons why
the claim for gratuity is not considered admissible, but
petitioner bank did not comply with the statutory obligation. It
is stated that the main allegation against him is that he caused
substantial financial loss t the bank on account of commissions
and omissions on the part of the applicant in sanctioning and
releasing loans to a tune of Rs.48 lacs each to M/s Shiva Metal
Industries, M/s Vasudeva Food Products and Rajyalakshmi
Food Products, it is stated that the 1st respondent covered all
these three loan accounts fully secured through valid mortgage
of collateral security; petitioner took physical possession of the
property during 2010; petitioner without auctioning the
properties, entered into OTS with all borrowers; dues are fully
paid as one the settlement in two accounts and under process of
being fully paid in the 3rd account, where there is recovery of Rs.
23 lacs out of settled amount of Rs. 35 lacs while the collateral
security mortgaged is still in possession of the bank; loss
therefore, is not a fact.
It is also stated, the bank has unjustifiably
dismissed the 1st respondent from service with effect from
10.01.2012 after having already allowed him to retire from
service on 31.08.2010. In a disciplinary proceedings conducted
after allowing the officer to first retire holding all his terminal
benefits, peritonea is not competent to order dismissal or
removal of the officer charge sheeted as per decision of the
Supreme Court in Jaswant Singh Gill v. Bharat Coaking Coal
Ltd. 1
3. This Court, while issuing notice before admission,
by order dated 18.07.2016, granted interim stay of disbursal of
the amount for a limited period. Subsequently, on the
Application filed seeking to vacate the said order, by order dated
16.09.2016, modified the order dated 18.07.2016 directing the
3rd respondent to send the amount deposited by the petitioner
to a nationalized bank in order to accrue interest thereon with
the instructions to the bank to allow the 1st respondent to
withdraw the accrued interest portion only every month subject
to the 1st respondent furnishing the details of the bank account
held by him and crediting the interest portion to the said bank
account. This arrangement would be subject to further orders in
the Writ Petition.
4. Learned Standing Counsel for petitioner Sri A.
Krishnam Raju submits that the Controlling Authority and
Appellate Authority ought to have held that the 1st respondent
was not entitled for payment of gratuity as he was dismissed
from the service of the bank pursuant to the disciplinary action
(2007) 1 SCC 663
for acts of which caused financial loss to the bank and those
acts can also be construed as acts involving moral turpitude.
He relied on the judgment of the Hon'ble Supreme Court in
Mahanadi Coal Fields Ltd. v. Rabindranath Choubey2
submits that withholding of gratuity after superannuation
because of pendency of disciplinary proceedings is permissible
depending on the relevant rules governing the service conditions
of an employee. It would be against the public policy to permit
an employee to go scot-free after collecting various benefits to
which he is not entitled and the event of superannuation cannot
come to his rescue and would amount to condemnation of guilt.
He also relied on the judgment in Western Coal Fields Ltd. V.
Manohar Govinda Fulzele (Civil Appeal No. 2608 of 2025),
dated 17.02.2025, wherein the Hon'ble Supreme Court
categorically observed that interpretation in C.G. Ajay Babu
does not come out of the statutory provision i.e. Section
4(6)()b)(ii) of the Act and the said interpretation was not
warranted. At para 10 it categorically held that provision of
forfeiture of gratuity under the Act does not speak of a
(2020) 18 SCC 71
conviction in criminal proceedings for an offence involving moral
turpitude.
5. Heard Sri Srinivasa Rao Bodduluri, learned counsel
for the 1st respondent. He submits that the order impugned
does not warrant any interference. It is contended that right of
an employee to receive pension is property under Article 31(1) of
the Constitution and by a mere executive order, the State had
no power to withhold the same. Gratuity is equated to pension
and the right to receive pension is in the nature of property and
this right cannot be taken away from a government employee
pending departmental or criminal proceedings.
6. A perusal of the impugned order dated 17.11.2014
would go to show that the Controlling Authority decided that
employee is entitled to receive Rs.9,92,935/- with interest for
delayed payment at 10% which comes to Rs.3,97,174/-,
totalling Rs.13,90,109/-. The Appeal preferred there against
was dismissed by order dated 10.03.2016. Petitioner has
brought on record the subsequent events by filing additional
affidavit. It is stated that challenging the dismissal order dated
10.01.2012, the 1st respondent filed Writ Petition No. 29660 of
2012, wherein this Court modified the punishment to that of
stoppage of two increments without cumulative effect. To come
to the said view, this Court observed that allegations against
petitioner have partly been proved. Hence, relying on the
judgment of the Hon'ble Apex Court that the scope of judicial
review in disciplinary matters can only be if the punishment is
disproportionately excessive and the Courts can interfere. In
this case, it is seen that major allegations against petitioner
have not been proved and the charges which have been proved
are not grave enough for imposition of punishment of dismissal
from service when the employee has put in unblemished service
of 27 years. The employee had retired on attaining the age of
superannuation even prior to the conclusion of the disciplinary
proceedings and has been denied the benefits of retirement on
account of punishment of dismissal from service. In view of the
above circumstance, this Court is of the opinion that
punishment of dismissal from service is highly excessive and
disproportionate to the allegations proved against him. In the
Appeal filed against the said order ie. Writ Appeal No. 769 of
2022, the Division Bench concurred with the findings given by
the learned Single Judge that punishment of dismissal from
service is shockingly disproportionate to the charge levelled
against the employee, however, the learned Single Judge ought
to have examined the matter and remanded the matter to the
bank to impose any other punishment other than dismissal or
removal and the learned Single Judge is not justified in
modifying the punishment. Thus holding, remanded the mater
to bank to impose any other punishment other than dismissal /
removal against the employee duly taking into consideration the
fact that he had rendered 36 years of service in the bank and he
was involved in solitary charge in his entire career. The bank
unsuccessfully filed Special Leave Petition.
7. Hence, in obedience to the order of the Division
Bench in Writ Appeal, the disciplinary authority in its revised
punishment order dated 23.01.2024 imposed the punishment of
compulsory retirement as envisaged under Regulation 4(h) of
Canara Bank Officer Employees' (Discipline and Appeal)
Regulations, 1976. In the said order, it is observed by the
disciplinary authority that though accounts are settled under
OTS/Written off, Bank of still exposed to financial loss of
Rs.44.64 lacs due to his gross misconduct and the gravity of
lapses observed on his part are serious in nature and it would
not mitigate the gross irregularities committed by him while
sanctioning the facilities. Admittedly, the 1st respondent has not
challenged the order of compulsory retirement till date.
Furthermore, he filed Writ Petition No. 9134 of 2024 seeking a
direction to respondents to forthwith release retirement benefits
such as pensionary benefits, gratuity, leave encashment
etcetera on par with to other employees. The said Writ Petition
is pending.
8. In this factual matrix of the case, the specific
contention of the 1st respondent is that a compulsorily-retired
government servant does not lose any of the benefits earned by
him till the date of his retirement and that such a retirement
does not take away the rights that have accrued to the
government servant because of his past service.
9. At this juncture, it is pertinent to see the judgment
in Rabindranath Choubey (supra), wherein the Hon'ble
Supreme Court categorically observed that Section 4 provides
for payment of gratuity. Section 4(6) contains a non-obstante
clause to sub-section (1). In case services of employee have been
terminated for wilful omission or negligence causing any
damage or loss to, or destruction of property belonging to the
employer, gratuity shall be forfeited to the extent of the damage
or loss so caused as provided under Section 4(6)(a). Even in the
absence of loss or damage, gratuity can be wholly or partially
forfeited under the provisions of Section 4(6)(b), in case
termination of services was based upon disorderly conduct or
act of violence on his part or offence involving moral turpitude
committed during the course of employment. Thus, it is
apparent that not only damage or loss can be recovered, but
gratuity can wholly or partially be withheld in case services are
terminated for the reasons specified in Section 4(6)(b). The Apex
Court summed up the issue and held that even when an
employee retires during the pendency of disciplinary
proceedings, his/her services are deemed to be continued, for
the purpose of continuation of the proceedings, as per Rules.
The delinquent employee since deemed to be in service, even a
major penalty of termination could be imposed on the
delinquent employee, who had superannuated during the
pendency of the proceedings. We cannot but reiterate that,
Jaswant Singh Gill had not considered the issue as to whether
there could be a forfeiture of gratuity if the delinquent employee
is found to have committed an offence involving moral
turpitude; even when there is no conviction entered by a
criminal Court on the very same offence. It is further held that
no conviction in a criminal proceeding is necessitated, if the
misconduct alleged and proved constitutes an offence involving
moral turpitude. With regard to the question whether forfeiture
of gratuity of the terminated employees should be only partly or
wholly, the Apex Court extracted paragraph 25 from Devendra
Kumar v. State of Uttaranchal 3 which reads as under:
" 25. More so, if the initial action is not in consonance with
law, the subsequent conduct of a party cannot sanctify the same.
Sublato fundamenta cadit opus- a foundation being removed, the
superstructure falls. A person having done wrong cannot take advantage
of his own wrong and plead bar of any law to frustrate the lawful trial by
a competent court. In such a case the legal maxim nullus commondum
capere potest de injuria sua propria applies.The persons violating the law
cannot be permitted to urge that their offence cannot be subjected to
inquiry, trial or investigation, (Vide Union of India v. Major General
Madan Lal Yadav and Lily Thomas v. Union of India.) Nor can a person
claim any right arising out of his own wrongdoing (jus ex injuria non
oritur).
10. In Rabindranath Choubey's case (supra), the
Hon'ble Supreme Court further held as under:-
" 40. We find it difficult to agree with the said decision in
Jaswant Singh Gill as Rules hold the field and are not repugnant to
(2013) 9 SCC 363
provisions of the Payment of Gratuity Act, 1972. This Court held that Rules
could not hold the field as they were not statutory thus, the effect of the rule
providing of deeming legal fiction as if he had continued in the service
notwithstanding crossing the age of superannuation was not considered.
Apart from that, the validity of Rules 34.2 or 34.3 could not have been
decided as it was not in question in the said case. The Controlling Authority
and the Appellate Authority ordered the payment of gratuity. The main
ground employed was that in the order passed by the departmental
authority, the quantum of damage or loss caused was not indicated, and it
was not the case covered by Sections 4(6)(a) and 4(6)(b). A writ petition filed
by the employer was dismissed. However, the intra-court appeal was allowed,
and it was opined that the Controlling Authority could not have gone into the
validity of the dismissal order and forfeiture of the gratuity since it was not
an appellate authority of disciplinary authority imposing the punishment of
dismissal. Thus, the jurisdictional scope in Jaswant Singh Gill was limited.
46. Several service benefits would depend upon the outcome
of the inquiry, such as concerning the period during which inquiry remained
pending. It would be against the public policy to permit an employee to go
scot-free after collecting various service benefits to which he would not be
entitled, and the event of superannuation cannot come to his rescue and
would amount to condonation of guilt. Because of the legal fiction provided
under the rules, it can be completed in the same manner as if the employee
had remained in service after superannuation, and appropriate punishment
can be imposed. Various provisions of the Gratuity Act discussed above do
not come in the way of departmental enquiry and as provided in Section 4(6)
and Rule 34.3 in case of dismissal gratuity can be forfeited wholly or
partially, and the loss can also be recovered. An inquiry can be continued as
provided under the relevant service rules as it is not provided in the Payment
of Gratuity Act, 1972 that inquiry shall come to an end as soon as the
employee attains the age of superannuation. We reiterate that the Act does
not deal with the matter of disciplinary inquiry, it contemplates recovery
from or forfeiture of gratuity wholly or partially as per misconduct committed
and does not deal with punishments to be imposed and does not supersede
Rules 34.2 and 34.3 of the CDA Rules. The mandate of Section 4(6) of
recovery of loss provided under Section 4(6)(a) and forfeiture of gratuity
wholly or partially under Section 4(6)(b) is furthered by Rules 34.2 and 34.3.
If there cannot be any dismissal after superannuation, intendment of the
provisions of Section 4(6) would be defeated. The provisions of Sections 4(1)
and 4(6) of the Payment of Gratuity Act, 1972 have to be given purposive
interpretation, and no way interdict holding of the departmental enquiry and
punishment to be imposed is not the subject-matter dealt with under the
Act.
11. It is to be noted that disciplinary proceedings were
initiated against the 1st respondent-employee while he was in
service of petitioner-Bank, and by the time he ceased to be in
service on attaining the age of superannuation, the disciplinary
proceedings were pending and the said proceedings culminated
in dismissal of the 1st respondent from service. When he
challenged his dismissal/termination by filing a writ petition,
the dismissal punishment was modified to reduction of two
increments by observing that punishment of dismissal is
disproportionate to the charges against the 1st respondent.
However, upon the petitioner-Bank filing a Writ Appeal, the
Hon'ble Division Bench remanded the matter to petitioner-Bank
to impose appropriate punishment; thereafter, the Bank
imposed the punishment of Compulsory Retirement on the 1st
respondent, however, has proposed forfeiture of gratuity amount
of petitioner on the ground that huge financial loss was incurred
by the Bank on account of the negligence of the 1st respondent.
It is to be noted that in the judgment of the Hon'ble Supreme
Court in Rabindranath Choubey, it was held that Rule 34.3,
read alongside Section 4(6) of the Payment of Gratuity Act,
allows an employer to withhold (or partially forfeit) gratuity if
misconduct alleged during service is proven or determined even
after retirement, and therefore the gratuity can be forfeited
based on the outcome of the disciplinary proceedings.
12. In the case at hand, there is no dispute about the
proven misconduct against the 1st respondent in the
departmental enquiry; and therefore, the action of the employer
in proposing to withhold the gratuity cannot be said to be
illegal. However, considering the rationale in the judgment of the
Hon'ble Supreme court in Rabindranath Choubey, this Court
is inclined to direct forfeiture of 25% of the gratuity amount,
and release the remaining amount admissible under the Rules,
within a period of six weeks from the date of receipt of a copy of
this Order. It is made clear that there shall be no interest
payable on the amount that may be released on account of this
Order.
13. The Writ Petition is accordingly, allowed. No costs.
14. Consequently, Miscellaneous Applications, if any
shall stand closed.
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NAGESH BHEEMAPAKA, J
27th June 2025
ksld
