High Court of Gujarat in one of its recent orders stated that employer cannot withhold gratuity of an employee under section 4(6)(a) of gratuity act if the invocation of such section is seemed to be an afterthought, and directed petitioners to pay gratuity amount to the respondents as they are incumbent to pay under section 7 of Payments of Gratuity Act.
Observations were made by Justice Biren Vaishnav
Brief Facts of the Case:
In the case of CHAIRMAN AND MANAGING DIRECTOR UNION BANK OF INDIA and others v. JAYKANT R GOHIL , the respondent was working as a branch manager with the petitioner bank. It was alleged by the petitioner that the respondent had disbursed the loans to people without acting diligently which resulted in monetary value of 4.36 crore loss to bank.
Subsequently a departmental enquiry was conducted against him and a
penalty of dismissal from service was imposed on the respondent.
Following which the respondent filed an appeal
against the order of bank , where the appellant authority reduced the penalty of respondent to compulsory retirement.
The Bank issued a show-cause notice after three years under Section 4(6)(a) of the Act asking the respondent to show cause as to why the order of forfeiture of gratuity be not passed against him, not being satisfactory of his reply ,the bank held that since a huge monetary loss has been suffered by the bank due to negligence on part of respondent , his amount of gratuity must be withheld. Afterwards controlling authority acted upon the impugned order of bank and stated that under section 7 of payment of gratuity act,1972, the bank is authorised to pay gratuity to the respondent within the stipulated time limit and therefore passed an order to pay gratuity amount of Rs.9,77,440/- along with simple interest at the rate of 10%.
Aggrieved by the said order of controlling and appellate authority , the petitioners challenged the order under Article 226 of the Constitution of India.
Counsel submissions:
Ld. Counsel for petitioner relied on the show cause notice issued to
the respondents an submitted that the bank found respondent to be the
cause of monetary loss to the bank which is
a sufficient and apt reason for the bank to withhold respondents
gratuity. He further submits that the appellate court wrongfully passed
the order relying on the judgement of Jaswant Singh Gill vs Bharat
Coking Coal Ltd. and Others which is overruled by the Apex Court in the
case of Chairman-cum-Managing Director, Mahanadi Coalfields Limited vs.
Rabindranath Choubey.
The counsel relied on the case of Ramanbhai Balchand Parmar vs State of Gujarat and Others and submits that the rate of interest must be reduced from 10% to 6%. Counsel for respondent submitted that in the charge sheet filed by the petitioner imputing allegations on respondent no quantification of loss suffered by bank was mentioned , he relied upon UCO Bank and Others vs. Anju Mathur and J.B. Micheal D’Souza vs. Appellate Authority under the Payment of Gratuity Act, Bangalore and Others where it was held that if there is failure to quantify loss caused to the bank resulting in breach of the Section 4(6)(a) of the Act and therefore the orders of the Controlling Authority as well as the Appellate Authority are just and proper.
High Court's Observations:
High Court Of Gujarat while perusing the records observed that the act of bank of issuing a show cause notice to the respondent and invoking section 4(6)(a) of the act after three years of the charge sheet filed and almost after 1 year and more of the reduced penalty of the respondent indicates that it is clearly an afterthought with a purpose of not paying the gratuity amount to the respondent. The bank deemed fit to invoke such loss amount also there is no clear indication as to how the bank came to such conclusion on amount as nothing was prescribed earlier until the respondent approached the bank for gratuity amount.
The court further discussed on the petitioners submission of wrongful
alliance of appellate court with case of Jaswant Singh Gill ( supra)
which was overruled , where the court stated that the case
depicts on a different issue and the present case relies upon a different issue, so the submission cannot be relied upon.
Court opined that the controlling authority rightfully examined the facts and was right on passing the order of paying gratuity to respondent. Court further considered the reliance made on case of ramnabhai (supra) and reduced the rate of 10% to that of 8%.
The appeal was partly allowed with directions to petitioner to pay gratuity amount of 9,77,440/- to respondent with rate of interest reduced from 10% to 8%.
CASE TITLE: CHAIRMAN AND MANAGING DIRECTOR UNION BANK OF INDIA and others v. JAYKANT R GOHIL
CASE DETAILS: R/SPECIAL CIVIL APPLICATION NO. 699 of 2019 , ORDER ON 06/06/2022
CORAM: Justice Biren Vaishnav
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