Dr. Bharat Bhushan Parsoon, J.:- Two points involved in this case requiring consideration and adjudication are:

(i) As to whether for the purposes of gratuity, basic pay drawn by the employee during the last month of his service or basic pay which the employee on the last day of his service (on account of imposition of penalty of reduction in rank or scale) is to be accounted; and,

(ii) Whether the employer is entitled to withhold his share of provident fund and interest thereon, on the ground that some loss is apprehended against the retiree.

2. The petitioner working as Manager with the respondents, for his acts of omission and commission during his service after having been proceeded against departmentally, was reduced by one stage in his existing scale on 24.2.1993 and after a few days i.e. on 28.2.1993, he superannuated. For purposes of calculation of gratuity amount payable to him, basic pay drawn by him on the last day of the month of his service, was taken into account against which action of the respondents he is before this Court claiming that the gratuity has to be calculated on the basis of basic pay actually drawn by him during the last month of his service an