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2016 Supreme(Cal) 437
IN THE HIGH COURT AT CALCUTTA
Nishita Mhatre And Tapabrata Chakraborty, JJ.
UCO Bank & Ors. – Appellants
Vs.
Nityananda Paul & Anr. - Respondents
MAT 1298 of 2012 with CAN 7976 of 2012
Decided On : 29-09-2016
For the Appellants : Mr. Rajsekhar Mantha, Ms. Gopa Chakraborty
For the Respondent: Mr. Soumya Majumder, Mr. Victor Chatterjee
The Payment of Gratuity Act, 1972, applies to the employees of UCO Bank, and gratuity cannot be denied solely based on misconduct without quantifying the actual loss suffered by the employer.
Headnote:
GRATUITY - UCO BANK - PAYMENT OF GRATUITY ACT, 1972 - UCO BANK OFFICER EMPLOYEES’ (CONDUCT) REGULATIONS, 1976 - WHETHER EMPLOYEES OF UCO BANK ARE ENTITLED TO PAYMENT OF GRATUITY UNDER THE ACT OR THE REGULATIONS - WHETHER GRATUITY CAN BE DENIED TO AN EMPLOYEE ONLY BECAUSE HE HAS BEEN HELD GUILTY OF MISCONDUCT WITHOUT QUANTIFYING THE ACTUAL LOSS SUFFERED BY THE EMPLOYER - WHETHER A SEPARATE ENQUIRY CAN BE HELD BY THE EMPLOYER FOR QUANTIFYING THE LOSS SUFFERED BY THE EMPLOYER AFTER IMPOSING THE PUNISHMENT OF REMOVAL, DISMISSAL ETC. ON THE EMPLOYEE.
Fact of the Case:
The respondent employee, working with the appellant bank, was removed from service after a disciplinary enquiry found him guilty of mala fide acts causing financial loss to the bank. The employee challenged the removal order and the subsequent denial of gratuity under the Payment of Gratuity Act, 1972, and the UCO Bank Officer Employees’ (Conduct) Regulations, 1976.
Finding of the Court:
1. The Payment of Gratuity Act, 1972, applies to the employees of UCO Bank as no exemption has been granted by the appropriate government under Section 5 of the Act. 2. The UCO Bank Officer Employees’ (Conduct) Regulations, 1976, do not apply to the payment of gratuity as the Act overrides any other enactment or instrument inconsistent with it. 3. Gratuity cannot be denied to an employee solely based on misconduct without quantifying the actual loss suffered by the employer. 4. A separate enquiry cannot be held by the employer for quantifying the loss after imposing punishment on the employee.
Issues: 1. Applicability of the Payment of Gratuity Act, 1972, and the UCO Bank Officer Employees’ (Conduct) Regulations, 1976, to the payment of gratuity to UCO Bank employees. 2. Whether gratuity can be denied solely based on misconduct without quantifying the actual loss suffered by the employer. 3. Permissibility of a separate enquiry for quantifying the loss after imposing punishment on the employee.
Ratio Decidendi: 1. The Payment of Gratuity Act, 1972, applies to UCO Bank employees as there is no exemption granted by the appropriate government under Section 5 of the Act. 2. The Act overrides any other enactment or instrument inconsistent with it, including the UCO Bank Officer Employees’ (Conduct) Regulations, 1976. 3. Gratuity cannot be denied solely based on misconduct without quantifying the actual loss suffered by the employer as per Section 4(6) of the Act. 4. A separate enquiry cannot be held by the employer for quantifying the loss after imposing punishment on the employee as the employer is required to mention the loss in the charge sheet before holding the disciplinary enquiry.
Final Decision: The appeal filed by the bank was dismissed, upholding the decision of the learned Single Judge. The bank was directed to implement the order of the learned Single Judge within eight weeks from the date of the judgment.
Nishita Mhatre, J.
1. The questions which arise in the present appeal are (i) whether the employees of the UCO Bank are entitled to payment of gratuity under the Payment of Gratuity Act, 1972 or under the UCO Bank Officer Employees’ (Conduct) Regulations, 1976; (ii) whether gratuity can be denied to an employee only because he has been held guilty of having committed a misconduct without quantifying the actual loss suffered by the employer before imposing any punishment on him; (iii) whether a separate enquiry can be held by the employer for quantifying the loss suffered by the employer after imposing the punishment of removal, dismissal etc. on the employee.
2. A few facts which are necessary to decide these issues are as under:
The respondent employee was working with the appellant Bank when he was issued a charge-sheet on 20th November, 1992. A disciplinary enquiry was held against him, pursuant to which he was removed from service. The removal order indicates that he had with mala fide intentions committed the following acts: (i) allowed excess drawings beyond the sanctioned limit; (ii) continued allowing over-withdrawal in various accounts despite receiving instructions to the contrary; and (iii) deliberately failed to report irregularities through the monthly statements with an ulterior motive.
Having been found guilty of all the charges, the employee was removed from service. He moved this Court by filing WP 2329 of 1994 challenging the order of removal. However, that writ petition was dismissed on 13th June, 2006 and the appeal preferred by the employee was also dismissed. Thus the finding that the employee had committed the aforesaid acts of misconduct was not disturbed and the punishment imposed on him attained finality.
3. The employee sought settlement of his dues such as provident fund, gratuity and leave wages. He submitted the requisite forms for the same in the year 2008 and then again in the year 2009. By a communication dated 15th February, 2010 the Bank called upon the employee to show cause why his gratuity should not be forfeited. The employee submitted an elaborate reply asserting that his gratuity and provident fund could not be forfeited. On 12th July, 2010 the Bank informed the employee that he had already been paid his contribution towards the provident fund and that he was not entitled to the Bank’s contribution as the Trustees of the provident fund had denied him the same. Similarly he was informed that the Trustees of the gratuity fund had also declined to pay gratuity to him. It appears that the employee’s contribution to the provident fund was credited to his account without the interest for the delay in payment.
4. A writ petition was filed by the employee seeking a declaration that Rule 18 of the UCO Bank Employees’ Provident Fund Rules was ultra vires Section 10 of the Employees’ Provident Fund and Miscellaneous Provision Act, 1952 and Article 21 of the Constitution of India. The employee further sought a direction to the Bank to release the Bank’s share or contribution of the provident fund, along with the accrued interest thereon, and the gratuity and leave salary together with interest on each of the amounts.
5. The writ petition was decided on 29th March, 2012 by the learned Single Judge of this Court. It was held that the denial of the Bank’s contribution towards provident fund and the interest on the delayed payment of the employee’s share of provident fund was illegal. The Court noted that the employee’s claim for leave encashment was undisputed and therefore directed the Bank to grant the benefit. As regards gratuity, the Court held that the Bank could not forfeit the same as the employee’s services were not terminated either for wilful omission or negligence causing financial loss to the Bank or for an offence involving moral turpitude. The Court held that the Payment of Gratuity Act did not apply to the employee. However, the learned Single Judge permitted the Bank to re-examine t
