Gratuity cannot be withheld in cases of termination by punishment without evidence of financial loss to the employer.

JUDGMENT :

VIKAS BAHL, J.

1. Challenge in the present appeal is to the judgment dated 02.02.1993, vide which the suit filed by the respondent/plaintiff was decreed and a declaration was granted to the effect that the plaintiff was entitled to his terminal benefits such as proportionate gratuity under the State Bank of Patiala (Officers) Service Regulations, 1979 (hereinafter referred to as “the 1979 Regulations), (i.e. after deducting the loss accrued to the Bank due to the plaintiff, if any) alongwith 12% interest per annum from the date of the suit till payment. Challenge is also to the judgment of the 1^st Appellate Court vide which the appeal filed by the present appellant/defendant has been dismissed.

2. Learned counsel for the appellant has submitted that in the present case, as per proviso (e) of the Regulation 12(2) of the State Bank of Patiala (Payment of Gratuity to Employees) Regulations, 1970 (hereinafter to be referred as “the 1970 Regulations”), the gratuity was to be paid only in the case the termination of service was in any other way except by way of punishment. It is submitted that since in the present case, the respondent-plaintiff was removed from service by way of punishment after holding a disciplinary inquiry, thus, the gratuity was not payable to the respondent-plaintiff. It is submitted that the judgment of the trial Court as well as of the 1^st Appellate Court had wrongly construed the regulation 12 of the 1970 Regulations and had come to an erroneous conclusion that the proportionate gratuity was payable to the respondent- plaintiff. It is further submitted that in the present case, there is no specific order with respect to there being any financial loss but the same would not entitle the respondent-plaintiff to gratuity as there was no requirement to pass any such order and even in case where there was no financial loss, then also, the gratuity was not payable as per the above said provisions. It is prayed that the judgment of the trial Court as well as of the 1^st Appellate Court be set aside and the present appeal, being meritorious, be allowed.

3. Learned counsel for the respondent-plaintiff, on the other hand, has opposed the present appeal and has submitted that regulation 12 (2) of the 1970 Regulations has been misconstrued on behalf of the appellant and a proper reading of the same would show that where the services of an employee have been terminated on account of misconduct committed by him and the same involves financial loss to the Bank, then, the forfeiture of the gratuity is permissible only to the extent of the financial loss. It is further submitted that a bare reading of Regulation 12 (2)(b), which is the substantive provision, would show that in case there is no financial loss to the Bank, then, the gratuity cannot be withheld. It is stated that in case the authorities are of the opinion that there is financial loss, then, an order, after giving due notice to an employee, is necessarily required to be passed reflecting the amount of financial loss as alleged by the department. It is further stated that since in the present case, admittedly, there is no such order passed nor is there any material to show that any financial loss had been caused by the respondent plaintiff, thus, in the said circumstances, the respondent-plaintiff is entitled to gratuity. It is submitted that the judgment of the trial Court as well as of the 1^st Appellate Court in the said circumstances deserve to be upheld.

4. It is further submitted that even a perusal of the order of removal dated 21.12.1987 (Ex.P-2), passed by the Managing Director- Disciplinary Authority as well as