IMPORTANT POINTS
(1) Forfeiture of gratuity may be directed to the extent of damage or loss so caused or destruction of property belonging to employer.
(2) Provisions of Gratuity Act have superiority over all other provisions of Regulations.

JUDGMENT :

J.K. MAHESHWARI, J.

1. Appellant, who was compulsorily retired as Sr. Manager, was denied the benefit of leave encashment, employer’s contribution of provident fund, gratuity and pension by the Punjab National Bank (hereinafter referred to as the “Bank”). On rejection of his representation by the authorities, a challenge was made by filing a writ petition before the High Court. The said writ petition was contested by the Bank, taking the plea that due to irregularities in granting loans and cash credit facilities under the Credit Guarantee Fund Trust Scheme for Micro and Small Enterprises (for short “CGTMSE”) and otherwise in routine loans, loss was caused to the Bank.

2. The background facts were that earlier, the appellant was charge-sheeted on 16.10.2009 and also served with a supplementary charge-sheet on 20.11.2009. On submitting of reply by the appellant, departmental enquiry was conducted and the enquiry report dated 11.01.2010 was submitted to the disciplinary authority who found him guilty and vide order dated 29.01.2010, penalty of compulsory retirement was inflicted. The appeal filed by the appellant was also dismissed by appellate authority on 28.07.2010.

3. The appellant by filing the writ petition did not challenge the order of compulsory retirement and only claimed the terminal benefits i.e. leave encashment, employer’s contribution of provident fund, gratuity and pension. In the meantime, the review filed by the appellant before the appellate authority was also dismissed on 06.01.2011. During pendency of the writ petition, the Board of Directors of the Bank vide resolution dated 20.12.2010 refused to give employer’s contribution of provident fund to the tune of Rs. 8,80,085/to the appellant. Learned Single Judge vide order dated 03.04.2012 allowed the said writ petition in part and directed the Bank to release the employer’s contribution of the provident fund as well as gratuity with interest @ 8.5% p.a. and leave encashment in terms of Regulation 38 of the Punjab National Bank (Officers’) Service Regulations, 1979 (for short “1979 Regulations”). It was also clarified that the dues be calculated from the date of compulsory retirement and be released within a period of eight weeks from the date of communication. Learned Single Judge denied the benefit of pension because the appellant was not an in-service candidate when the scheme for shifting to the pension regime became operational.

4. On filing the Special Appeal by the Bank, the Division Bench allowed the same in part maintaining the order of grant of leave encashment, but set-aside the grant of provident fund (Bank’s contribution) and gratuity on the pretext that by an act of the appellant, loss has been caused to the Bank.

5. In view of the foregoing facts, grant of leave encashment to appellant is no more res integra. The appellant is not challenging the refusal to grant pension as he was not an in-service candidate at the time of change of scheme. The only question that falls for consideration is whether the denial of employer’s contribution of Provident Fund and nonpayment of gratuity to appellant because of the order of compulsory retirement, as directed by the impugned order, is justified or not?

6. Mr. Irshad Ahmad, learned counsel appearing for the appellant contends that Rule 13 of the Punjab National Bank Employees’ Provident Fund Trust Rules (for short “P.F. Trust Rules”) gives first lien to the Bank on the contributions made by it to recover any loss, damages and liabilities which the Bank may at any time sustain or incur by reasons of any dishonest act, deed or omission or gross misconduct by a member of the provident fund. It is submitted that in the main charge-sheet or in the supplementary charge-sheet, it is not alleged that due to grant of loan under the scheme or in other loans, any loss has been caused to the Bank. In the report of enquiry, finding of loss having been caused to the Bank has not been recorded. Learned counsel contends