The United Bank of India (Officers) Service Regulations, 1979, have an overriding effect over the Payment of Gratuity Act, 1972, in case of conflict, and the employer can forfeit gratuity under Section 4(6) of the Act in cases of misconduct causing damage or loss to the employer.

Soumen Sen, J.:

This writ petition raised an interesting point of law.

The writ petition is directed against an order passed by the appellate authority under the Payment of Gratuity Act, 1972 (hereinafter referred to as the “said Act”) affirming the order passed by the Assistant Labour Commissioner, Central Kolkata on 1st February, 2013 as a Controlling Authority under the said Act.

Although various points have been raised in the writ petition but Mr. R.N. Majumdar, learned Counsel appearing on behalf of the petitioner restricts his argument on the overriding effect the United Bank of India (Officers) Service Regulations, 1979 (hereinafter referred to as the “Service Regulations, 1979) over the provisions of the said Act.

The principal argument of Mr. Majumdar appears to be that the eligibility for gratuity of the petitioner shall be governed by Regulation 46 of the Service Regulations, 1979 and not under Section 4 of the Payment of Gratuity Act, 1972.

Under Section 4(6) of the said Act, the gratuity of an employee whose service has been terminated for any act, willful omission or any negligence causing any damage or loss to or destruction of property belonging to the employer shall be forfeited to the extent of damage, loss so caused.

It is submitted that the Payment of Gratuity Act is a general law and the Service Regulations, 1979 is having an overriding effect over the Payment of Gratuity Act in case of conflict.

The petitioner is a nationalized bank constituted under the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970. In exercise of the power conferred by Section 19 of the said Act, 1970, the Board of Directors of the Company in consultation with the Reserve Bank of India and with the previous sanction of the Central Government framed the Service Regulations, 1979. Regulation 46 of the Service Regulations, 1979 deals with the Payment of Gratuity. The said Regulation reads:-

“46. (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(ten) years of service. (Effective from 15-11-84)

(2)The amount of Gratuity payable to an officer shall be one month’s pay for every completed year of service, subject to maximum of 15 month’s 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 month’s pay for each completed year of service beyond thirty years.”

The eligibility criteria for payment of gratuity under the Regulation to a large extent are different from Regulation 46 of the Service Regulations, 1979.

Under Section 4 of the Payment of Gratuity Act, gratuity is payable on termination of employment after the employee has rendered continuous service for not less than 5 years:-

(a) on his superannuation, or

(b) on his retirement or resignation, or

(c) on his death or disablement due to accident or disease.

Provided that the completion of continuous service of 5 years shall not be necessary where the termination of employment of any employee is due to death or disablement. Under Section 4 sub-section 2 of the 1972 Act, for every completed year of service or part thereof in excess of six months, the employer shall pay gratuity to an employee at the rate of fifteen days’ wages based on the rate of wages last drawn by the employee concerned whereas under the Regulation 46, the employee shall be entitled to payment of 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 punish