Case Note & Summary
The petitioner, Canara Bank, challenged the order dated 22.12.2020 passed by the Appellate Authority under the Payment of Gratuity Act, 1972 (respondent No.1) in Appeal No.36(479)/2019-B1, which directed the Bank to pay gratuity to respondent No.2, P. Rajendra, a former employee. The respondent No.2 was appointed as a clerk with the Bank on 24.7.1981 under the Scheduled Tribe category, having furnished a caste certificate dated 19.7.1978. The Bank initiated disciplinary proceedings against him by issuing a charge sheet on 12.3.1990 alleging that the caste certificate was not genuine. However, the charge sheet was not proceeded with due to directions in W.P. No.2387/1990. Subsequently, there were internal communications regarding verification of the caste certificate. The respondent No.2 retired from service on 31.1.2019. At the time of his retirement, the disciplinary proceedings were still pending and had not been concluded. The Controlling Authority under the Payment of Gratuity Act directed the Bank to pay gratuity, which was upheld by the Appellate Authority. The Bank then filed the present writ petition under Article 226 of the Constitution of India. The main legal issue was whether the Bank could withhold gratuity under Section 4(6) of the Payment of Gratuity Act, 1972 on the ground of pending disciplinary proceedings. The Court noted that the disciplinary proceedings were initiated in 1990 but were not concluded before the respondent's retirement on 31.1.2019. The Court held that under Section 4(6) of the Act, gratuity can be forfeited only if the disciplinary proceedings are concluded before retirement. Since the proceedings were not concluded, the employee is entitled to gratuity. The Court found no error in the impugned order and dismissed the writ petition. The decision was in favor of the employee (respondent No.2).
Headnote
A) Payment of Gratuity Act, 1972 - Section 4(6) - Forfeiture of Gratuity - Disciplinary Proceedings - The issue was whether gratuity can be withheld when disciplinary proceedings were initiated but not concluded before the employee's retirement. The Court held that under Section 4(6) of the Payment of Gratuity Act, 1972, gratuity can be forfeited only if the disciplinary proceedings are concluded before retirement. Since the proceedings were not concluded, the employee is entitled to gratuity. (Paras 3-4)
B) Gratuity - Payment of Gratuity Act, 1972 - Section 7 - Appellate Authority - The Appellate Authority's order directing payment of gratuity was upheld as the disciplinary proceedings were not concluded prior to retirement. The Court found no error in the order. (Para 4)
Issue of Consideration
Whether the Appellate Authority under the Payment of Gratuity Act, 1972 was justified in directing payment of gratuity to the employee despite pending disciplinary proceedings at the time of retirement?
Final Decision
The writ petition was dismissed. The order of the Appellate Authority dated 22.12.2020 directing payment of gratuity to respondent No.2 was upheld. No order as to costs.
Law Points
- Gratuity is payable upon retirement even if disciplinary proceedings are pending
- unless concluded before retirement
- Section 4(6) of Payment of Gratuity Act
- 1972
- Writ petition under Article 226 of Constitution of India
Case Details
2021 LawText (KAR) (07) 8
Writ Petition No.11410/2021 (L-PG)
The General Manager (P), Canara Bank
The Appellate Authority under Payment of Gratuity Act, 1972 and Deputy Chief Labour Commissioner (Central) and P Rajendra
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Nature of Litigation
Writ petition under Article 226 of the Constitution of India challenging the order of the Appellate Authority under the Payment of Gratuity Act, 1972 directing payment of gratuity.
Remedy Sought
The petitioner (Canara Bank) sought to quash the order dated 22.12.2020 of the Appellate Authority and to uphold the denial of gratuity to the respondent No.2.
Filing Reason
The Bank was aggrieved by the Appellate Authority's order directing payment of gratuity to the employee despite pending disciplinary proceedings.
Previous Decisions
The Controlling Authority under the Payment of Gratuity Act had directed payment of gratuity, which was upheld by the Appellate Authority in Appeal No.36(479)/2019-B1 dated 22.12.2020.
Issues
Whether the Appellate Authority under the Payment of Gratuity Act, 1972 was justified in directing payment of gratuity to the employee despite pending disciplinary proceedings at the time of retirement?
Whether Section 4(6) of the Payment of Gratuity Act, 1972 permits forfeiture of gratuity when disciplinary proceedings are not concluded before retirement?
Submissions/Arguments
The petitioner-Bank argued that since disciplinary proceedings were pending against the respondent No.2 for submitting a false caste certificate, gratuity should be withheld under Section 4(6) of the Payment of Gratuity Act, 1972.
The respondent No.2 contended that the disciplinary proceedings were not concluded before his retirement and therefore he is entitled to gratuity as per law.
Ratio Decidendi
Under Section 4(6) of the Payment of Gratuity Act, 1972, gratuity can be forfeited only if the disciplinary proceedings are concluded before the employee's retirement. Since the disciplinary proceedings were not concluded before the respondent's retirement on 31.1.2019, the employee is entitled to gratuity.
Judgment Excerpts
In the instant petition petitioner has assailed the order of the Appellate Authority (respondent No.1) (vide Annexure-A) dated 22.12.2020.
Respondent No.2 - P. Rajendra was appointed as a clerk with the petitioner-Bank on 24.7.1981 under Schedule Tribe Category.
The petitioner - Bank initiated enquiry by framing charges and issuing charge sheet on 12.3.1990 on the allegations that respondent No.2 is alleged to have submitted Schedule Tribe Certificate which is not a genuine one.
Respondent No.2 retired from service on 31.1.2019.
The disciplinary proceedings were not concluded as on the date of retirement of respondent No.2.
In the light of Section 4(6) of the Payment of Gratuity Act, 1972, if the disciplinary proceedings are not concluded as on the date of retirement, the employee is entitled to gratuity.
Procedural History
The Bank issued a charge sheet to respondent No.2 on 12.3.1990 regarding the genuineness of his caste certificate. The charge sheet was not proceeded with due to directions in W.P. No.2387/1990. Respondent No.2 retired on 31.1.2019. The Controlling Authority under the Payment of Gratuity Act directed payment of gratuity. The Bank appealed, and the Appellate Authority upheld the order on 22.12.2020. The Bank then filed the present writ petition under Article 226 of the Constitution of India.
Acts & Sections
- Payment of Gratuity Act, 1972: Section 4(6), Section 7
- Constitution of India: Article 226
