The question arising in this case is whether the employer Bank can effect any recovery from the arrears of salary which became due to an employee after his retirement consequent to pay revision with retrospective effect, alleging that the employee had caused loss to the bank, even without conducting any inquiry in which he is found liable for the loss and without quantifying such liability with notice to him and also whether fine can be imposed after retirement of an employee unilaterally and adjust the said fine from the amount due to him towards arrears of salary.

2. The petitioner retired from the 1st respondent -Kerala Gramin Bank on 30.6.2014, while working as Chief Manager at Kaloor Branch, after rendering 37 years of service. He was paid the terminal benefits on 30.6.2014. While so in August 2015 revision of pay was effected for the employees of the Regional Rural Banks with retrospective effect from 01.11.2012. Petitioner submitted several representations requesting for disbursement of the benefits on account of the pay revision. In reply to one of his representations, the 1st respondent, as per Ext.P3 letter, informed him on 30.01.2017 that a sum of Rs.2,19,335.02 towards arrears of salary and a sum of Rs.83,450.50 payable to the petitioner as per the 10th bipartite settlement were withheld on account of the gold auction deficit at Kaloor branch during his tenure as Branch Manger. However it was stated that “now it has been decided by the competent authority to have a lenient view on the issue of accountability on gold auction deficit and to exonerate by imposing a fine of 15% by the deficit amount as on the date of auction”. Accordingly a fine to the tune of Rs.168887.00 was imposed on him for the auction deficit and the balance amount of Rs.133878.52 was released to him.

3. Thereupon petitioner addressed the Chairman of the 1st respondent bank in Ext.P5 letter stating that there were no deficit in auction conducted during his tenure as Manager as alleged in the letter and that gold auctions were deferred as advised by the Regional Manager, due to crash on market value of gold in April 2013 as the outstanding dues could not be realized. He also stated that all these accounts were sanctioned under 'one month gold loan scheme' where the lending rates were 75% to 80% of the market rate of gold complying with the guidelines. It is stated that a minimum fall in prices affected the full recovery of those loan accounts by auction and he had taken timely action in those accounts as per the procedure. Even though he had issued auction notices it could not be completed since regional office did not grant permission to conduct the auction without realizing the outstanding dues in full, as the prevailing market price of gold at that time was due to fall in price. He stated that he had pointed out this to the General Manager and sought permission to auction at least two accounts with a predicted deficit amount. Producing Ext.P5 letter dated 5.11.2013 addressed to the head office, petitioner submits that the head office did not reply or did not give any direction to proceed with the auction. Therefore it was stated that only 18 accounts were pending at the time of his retirement out of the 36 reported on 5.11.2013, though prices went down. He also pointed out that subsequent to his retirement the head office had directed the branch to auction the gold and to initiate revenue recovery proceedings against the defaulters for the deficit amount.

4. He pointed out that in case auction was permitted, when he requested, the deficit would have been minimal. He also stated that the fine imposed was unilateral and contrary to the principles of natural justice. Therefore he requested for payment of the arrears with interest.

5. On the basis of repeated representations, the 1st respondent as per Ext.P6 letter dated 13.03.2017 informed the petitioner that the bank had taken a lenient view in his case imposing a fine of 15% of the deficit