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2022 Supreme(MP) 635

High Court of Madhya Pradesh
Vishal Mishra, J.
GENERAL MANAGER, CANARA BANK – APPELLANT
Versus
PRAKASH N. MANDVE & ORS. – RESPONDENTS
W. P. No. 8913 of 2019
Decided On : 03-02-2022

Advocates appeared :
For the Appellant : Hans Raj Mutreja
For the Respondent : Tej Kumar Malik

Headnote:(A) Payment of Gratuity Act, 1972 - Section 4 - Entitlement to interest on gratuity delayed payment - The court considered if the employee, after being acquitted in a corruption case, was entitled to interest on delayed gratuity payments. The decision cited that gratuity is a right earned by service, and can only be withheld under specific conditions. The absence of punitive action from a criminal court negates the bank's claim for forfeiture of gratuity due to moral turpitude. The employee was found not entitled to interest based on the payment’s timing relative to ongoing investigations. (Paras 9, 18, 19)

(B) The court ruled that gratuity can be withheld pending disciplinary proceedings, which were initiated during the employee's service. Any forfeiture must comply with established statutory conditions. (Paras 18, 20)

Facts of the case:
The employee was dismissed due to corruption allegations, later acquitted, but after extensive delay in gratuity payment, he sought interest. The bank denied entitlement citing procedural delays in the claim.

Findings of Court:
The appellate authority favored the employee for gratuity payment but the High Court ruled against interest claims, stating timely payment during investigations was sufficient.

Issues: The main issue addressed was the employee's entitlement to interest on delayed gratuity payment after acquittal and challenge to the moral turpitude claim.

Ratio Decidendi: The court specified that while misconduct may lead to forfeiture of gratuity, actual conviction is necessary to justify such forfeiture. The mere initiation of proceedings is inadequate to delay gratuity payments.

Result: Petition allowed, no interest payable.

Table of Content
1. nature of entitlement to gratuity under the payment of gratuity act. (Para 1 , 2 , 3)
2. justification for withholding interest on delayed payment. (Para 4 , 5)
3. outcome of disciplinary and legal proceedings against the employee impacts gratuity rights. (Para 6 , 7)
4. clarity on conditions for forfeiture of gratuity based on legal standards. (Para 9 , 10)
5. legal guidelines for withholding gratuity pending inquiry. (Para 11 , 12 , 15)
6. final ruling on gratuity payment and interest entitlement. (Para 16 , 17 , 18)

ORDER : – With the consent of the parties the matter is finally heard.

    Challenge in this petition has been made to an order dated 10th July, 2019 passed by the Gratuity Appeals Nos. 60/18 and 61/18, whereby, Deputy Chief Labour Commissioner, Central Jabalpur has passed an order to pay gratuity amount alongwith interest to the respondent No. 1. Challenge is being made on limited issue that whether the respondent No. 1 is entitled for grant of interest for the delayed payment of gratuity by the authority or not?

2. It is pointed out that the petitioner are a cooperate body constituted under the Banking Companies Act, 1970 having its head office at Manipal and an incorporate office at Bangalore. The respondent No. 1 was appointed on 2nd April, 1977 as Probationary Clerk by the Bank and was confirmed on 28-10-1977. While working in the petitioner’s bank at its Gandhi Bagh, Nagpur Branch between 9-11-2010 to 30-9-2011, the respondent by corrupt and illegal means or otherwise by abusing his official position demanded and accepted pecuniary advantage of Rs. 5000/- from one Rakhika, a customer of the Bank on 14th July, 2011. The respondent No. 1 was trapped by ACB, CBI Nagpur on the complaint of the customer and after investigation, an FIR was registered against him for offences punishable under Prevention of Corruption Act and a charge-sheet has been filed against the respondent No. 1. A departmental enquiry was drawn up against the respondent No. 1 and charges were found to be proved and the disciplinary authority vide order dated 31st May, 2016 found that respondent No. 1 liable for breach of Regulation 3(1) read with Regulation 24 of the Syndicate Bank Officer Employees’ (Conduct) Regulations, 1976 and punishment of dismissal from service was imposed upon the respondent No. 1. An appeal preferred by the respondent No. 1, was rejected and thereafter show cause notice dated 19th October, 2016 was issued to the respondent No. 1, wherein, he was asked to submit a reply as to why his gratuity amount should not be forfeited. A reply was duly submitted by the respondent No. 1 and the authority after considering reply of respondent No. 1 had decided that the act committed by the respondent No. 1 falls within the purview of offence involving moral turpitude, therefore, he was informed that he was not entitled for any gratuity as per Rule 8(1)(ii) of the Payment of Gratuity Act, 1972.

3. The respondent No. 1/employee aggrieved by the action of the petitioner/bank had raised a claim in prescribed form before the Regional Labour Commissioner (Central) Jabalpur. The case was registered as ALC 36-(45) and the Controlling Authority under Payment of Gratuity Act, 1972 and RLC, Bhopal. The controlling authority after considering the reply filed by the respondent No. 1 as well as the evidence led by the authorities had arrived at a conclusion that the respondent No. 1 was entitled for payment of gratuity and the claim to the tune of Rs. 10.00 lakh was allowed in favour of the respondent/ employee. Thereafter a notice was for payment of gratuity to the bank in prescribed form on 27-3-2018 was issued, but no claim was granted by the authority. An appeal was preferred by the respondent No. 1 before the Deputy Chief Labour Commissioner, (Central) Jabalpur as well as by the employer and the appeal were registered as Gratuity Appeal Nos. 60/18 and 61/18. The appellate authority vide impugned order has dismissed the appeal file

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