‘Afterthought’: Calcutta High Court slams Union Bank bid to withhold dismissed manager’s Rs 18 lakh gratuity after 4 years

The Calcutta High Court was hearing the plea filed by Union Bank of India seeking to set aside the orders dated June 13, 2023 and March 27, 2024, passed by the authorities under the Payment of Gratuity Act.

‘Clear abuse of process of law’

• The Calcutta High Court mentioned that the said conduct of the Union Bank is clearly an abuse of the process of law and against the principle of natural justice.
• It was added that it clearly shows that the entire enquiry proceedings have not been conducted in accordance with law.
• The court noted that even the forfeiture appeared to be an afterthought, and it was done only after the petitioner made the application before the controlling authority for a gratuity. “The loss was quantified in the show-cause letter issued for forfeiting the gratuity of the workman/respondent no. 3 after almost 4 years… Such conduct on the part of the petitioner prima facie proves that same is an afterthought,” it said.
• Quantifying the loss at the stage of forfeiture of gratuity is not in accordance with law, as the said amount quantifying the loss was not part of the enquiry proceeding, including the chargesheet and the show-cause, the Calcutta High Court stated.
• The court noted that neither the show-cause notice, nor the chargesheet, nor the enquiry report, nor even the dismissal order quantified the alleged loss suffered by the bank, despite such quantification being mandatory in proceedings involving forfeiture of gratuity.
• It pointed out that Union Bank cannot claim that the bank regulations shall prevail over the Payment of Gratuity Act.
• The Calcutta High Court directed the controlling authority to release the amount of gratuity deposited with it, along with interest, to the employee within 30 days.

Background

• According to the bank, the employee in question joined Union Bank in August 1987 and was eventually promoted to the post of chief manager.
• He was served with Articles of Charge dated March 1, 2018, alleging irregularities in sanctioning loans while posted as manager at the Agra Development Authority branch.
• The disciplinary authority, by an order dated January 22, 2019, imposed the punishment of dismissal from service. The employee preferred an appeal before the appellate authority of the bank, but the punishment was upheld.

Quantifying loss after 4 years

• The bank alleged that the employee had sanctioned nearly 280 loans amounting to Rs 61.51 crore without adhering to banking guidelines and that the resulting financial loss justified forfeiture of gratuity.
• However, the employee later approached the controlling authority under the Payment of Gratuity Act seeking release of gratuity.
• The employee filed Form-N before the controlling authority under the Payment of Gratuity Act, seeking release of gratuity.
• In April 2022, the Union Bank received notice from the controlling authority regarding the gratuity claim.
• Subsequently, the bank issued a notice proposing forfeiture of gratuity and, for the first time, quantified the alleged financial loss nearly four years after the dismissal order.
• In February 2023, the bank formally informed the employee that his gratuity stood forfeited.
• In June 2023, the controlling authority directed the bank to pay Rs 18.48 lakh towards gratuity along with interest. Later, the bank deposited Rs 26.87 lakh before the authority while filing an appeal.
• The appellate authority upheld the employee’s gratuity claim and rejected the bank’s appeal on March 27, 2024.
• Aggrieved by the same, Union Bank approached the Calcutta High Court.

‘Loss greater than Rs 18 lakh’

Appearing for the Union Bank, Senior Advocate Ranjay De argued before the Calcutta High Court that the decision of the employee regarding the absence of correct quantification of financial loss is of no consequence since whatever may be the amount or loss suffered by the bank, less or more, is always greater than Rs 18.48 lakh.

He submitted that the relevant clause of the Union Bank of India employees’ Gratuity Fund Rules empowers the bank to forfeit the gratuity to the extent of financial loss suffered by it.

Notice after 4 years of dismissal

Representing the employee, advocate Pratik Majumder submitted before the Calcutta High Court that even though no amount was quantified, and punishment of dismissal from service was issued against him, no gratuity was paid.

He further added that it is only on November 21, 2022, that the Union Bank issued a notice for forfeiture of gratuity after almost four years of passing the order of dismissal from service.

It was stated that in the present case, the loss caused to the bank was never quantified, neither at the time of issuance of the show-cause notice, nor at the time of issuing the chargesheet and the employee was never given any opportunity to respond to the allegation of causing loss.