2013 Supreme(P&H) 260

IN THE HIGH COURT OF PUNJAB AND HARYANA
[FULL BENCH]
Before
The Hon’ble Mr. Chief Justice A.K. Sikri
The Hon’ble Mr. Justice Rakesh Kumar Jain
The Hon’ble Mr. Justice Jitendra Chauhan
Letters Patent Appeal No.566 of 2012 (O&M)
UCO Bank & Ors.
v.
Anju Mathur
{Decided on 07/03/2013}

Headnote:Service Law--Gratuity--Forfeiture of--The gratuity can be forfeited if there is damage or loss suffered by the employer because of wilful omission or negligence of the employee which act led to his termination--In that case, the forfeiture has to be to the extent of damage or loss caused--The gratuity can also be forfeited if the misconduct by the delinquent employee constitutes an offence involving moral turpitude and when such an offence is committed by him in the course of his employment.

       Service Law--Leave Encashment--Compulsory retirement--When an officer “retires” from service, in whatever manner, he is eligible for leave encashment.

       (A) Service Law--Compulsory Retirement--Compulsory retirement is of two types--There can be an administrative order retiring an employee compulsorily from service when the employer finds that the employee has become deadwood--However, the compulsory retirement is also provided as one of the modes of punishment. (Para 14)

       (B) Service Law--Compulsory Retirement--Forfeiture of Gratuity--Whenever it is a case of termination by any other mode than by way of punishment, gratuity is payable, but not when termination is occasioned by way of penalty on account of misconduct committed by an employee established in the regular departmental enquiry against such delinquent employee--UCO Bank officers Regulation, Regulation 46.

       We are, therefore, of the opinion that Regulation 46(1) of the Officers’ Regulations would not apply when termination is occasioned by way of compulsory retirement by way of punishment on account of misconduct proved against such an employee after regular departmental enquiry--To that extent, the judgment of Division Bench in Ashwani Kumar Sharma (supra) does not lay down correct law and is hereby overruled. (Para 15)

       (C) Service Law--Gratuity--Forfeiture of--The gratuity can be forfeited if there is damage or loss suffered by the employer because of wilful omission or negligence of the employee which act led to his termination--In that case, the forfeiture has to be to the extent of damage or loss caused--The gratuity can also be forfeited if the misconduct by the delinquent employee constitutes an offence involving moral turpitude and when such an offence is committed by him in the course of his employment. (Para 16)

       (D) Service Law--Gratuity--Forfeiture of--Show Cause notice--It was incumbent upon the appellant-Bank to mention specifically about the actual loss having been suffered, if it suffered, in the show cause notice itself with particulars of that loss in order to enable the respondent to meet the same--Though the figure is given, in the final order, even that is not substantiated by giving particulars thereof--Show Cause notice set aside.

       No doubt, the irregularities committed by the respondent may have exposed the Bank to such losses--However, that is entirely different from loss having been actually suffered by the bank--Even if some accounts became bad and the Bank had to file suits for recovery concerning those accounts against the defaulting parties, that would not automatically lead to the conclusion that the loss/damage has been suffered--It is possible that Bank is able to recover full money in those proceedings. Whether that happened in fact or not and whether loss is actually suffered or not is not discernible from either the charge-sheet or the enquiry report. (Para 23)

       (E) Service Law--Compulsory retirement--Cannot be treated as ordinary termination of Services. (Para 25)

       (F) Service Law--Leave Encashment--Compulsory retirement--When an officer “retires” from service, in whatever manner, he is eligible for leave encashment.

       It cannot be disputed that compulsory retirement occasioned otherwise than by way of penalty would be covered by the proviso and leave encashment would be admissible as in that eventuality also, the officer “retires” from service--However, unlike Regulation 46 of the Officers’ Regulations, the cases where the retirement comes by way of penalty of compulsory retirement, are not excluded. (Para 27)

       (G) Service Law--Provident Fund--Forfeiture Employees Share--Compulsory Retirement--Where the punishment imposed is not that of dismissal but that of compulsory retirement--Therefore the appellant-bank cannot forfeit the employer’s contribution--UCO Bank Employee’s Provided Fund Rules R.17 & 18.

       As far as Rule 18 is concerned, the Bank is given the right to recover from the contribution made by the Bank, i.e., employer’s share, in case of any loss or damage resulting to the Bank--Here also it is the Board, i.e., Board of Directors which is entitled to declare the amount of loss or damage so resulting--In the instant case, there is no declaration by the Board of Directors. Furthermore, this Rule applies only when the contributor is “dismissed” for fraud or misconduct--This Rule does not apply when he is “retired” from the Bank even by imposing the penalty of “compulsory retirement”--Whereas, Rule 17 mentions the punishment of dismissal and also includes the retirement, the element of retirement i.e. penalty of compulsory retirement as a consequence of fraud or misconduct is conspicuously absent in Rule 18--It is, thus, clear that Rule 18 would not apply in the present case where the punishment imposed is not that of dismissal but that of compulsory retirement--Therefore the appellant-bank cannot forfeit the employer’s contribution in the instant case--The action of the appellant-bank in forfeiting the employer’s share is not correct and is, therefore, set aside--However, liberty is given to the Trustees of the Fund to proceed in the matter in accordance with Rule 17 of the UCO Bank Employees’ Provident Fund Rules. (Para 29)