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2014 DIGILAW 266 (PNJ)

B. D. Dawar v. Punjab National Bank

2014-02-04

BHARAT BHUSHAN PARSOON

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JUDGMENT Dr. Bharat Bhushan Parsoon, J.:- Two points involved in this case requiring consideration and adjudication are: (i) As to whether for the purposes of gratuity, basic pay drawn by the employee during the last month of his service or basic pay which the employee on the last day of his service (on account of imposition of penalty of reduction in rank or scale) is to be accounted; and, (ii) Whether the employer is entitled to withhold his share of provident fund and interest thereon, on the ground that some loss is apprehended against the retiree. 2. The petitioner working as Manager with the respondents, for his acts of omission and commission during his service after having been proceeded against departmentally, was reduced by one stage in his existing scale on 24.2.1993 and after a few days i.e. on 28.2.1993, he superannuated. For purposes of calculation of gratuity amount payable to him, basic pay drawn by him on the last day of the month of his service, was taken into account against which action of the respondents he is before this Court claiming that the gratuity has to be calculated on the basis of basic pay actually drawn by him during the last month of his service and not on the basis of basic pay which he drew on the last day of his service on account of imposition of penalty of reduction by stages in his existing scale. 3. Hearing has been provided to counsel for the parties while going through the paper book. 4. According to Regulation 46 of the Punjab National Bank (Officers’) Service Regulations, 1979 (hereinafter referred to as, the Regulations), every officer of the respondent-bank is eligible for payment of gratuity interalia on retirement. Regulation 46 of the Regulations for ready reference is appended as below: “46. Gratuity (1) Every officer shall be eligible for Gratuity on- (a) Retirement. (b) Death. (c) Disablement rendering him unfit for further services as certified by a Medical Officer approved by the Bank. (d) Resignation after completing ten years of continuous service. (e) Termination of service in any other way except by way of punishment after completion of 10 years of service. (2) The Amount of Gratuity payable to an officer shall be one month’s pay for every completed year of service, subject to a maximum of 15 months’ Pay. (d) Resignation after completing ten years of continuous service. (e) Termination of service in any other way except by way of punishment after completion of 10 years of service. (2) The Amount of Gratuity payable to an officer shall be one month’s pay for every completed year of service, subject to a maximum of 15 months’ Pay. Provided that where an officer has completed more than 30 years of service, he shall be eligible by way of Gratuity for an additional amount at the rate of one half of a month’s pay for each completed year of service beyond thirty years. Note:- If the fraction of service beyond completed years of service is six months or more, gratuity will be paid pro rata for the period. 5. Appendix-I to the Punjab National Bank Employees Gratuity Fund Rules provides for computation of gratuity payable to an employee. Said Appendix-I for quick reference is also reproduced as under: “Appendix-I 1. Upon normal Retirement of the employee at or after age 57. ‘A’ For Officers. At the rate of one month’s basic pay last drawn by him for each completed year of service subject to a maximum of 15 months basic pay. If an officer has put in service for over 30 years, an additional amount at the rate of half month’s basic pay last dawn by him for each completed year of service beyond 30 years shall also become payable. The basic pay will not include allowance of any kind, bonus or other remuneration or any perquisite.” 6. Incidentally, both these provisions which are under consideration in this case came up for consideration before the Himachal Pradesh High Court at Shimla in a case titled S.K.Mitra Versus Punjab National Bank and others 1996 DLJ (Enquiries) 131 where in para 20 of the judgment, it has been held as under: “It is well settled law that liberal interpretation should be given to the provisions of the Act or Rules relating to the retiral benefits. In the present case the gratuity and leave encashment being the retiral benefits, it was incumbent upon the respondents to have applied the provisions of the relevant Rules in their right perspective. In the present case the gratuity and leave encashment being the retiral benefits, it was incumbent upon the respondents to have applied the provisions of the relevant Rules in their right perspective. The petitioner had actually drawn basic pay i.e. Rs.5310/- (inclusive of stagnation increments and professional qualification allowance) for a period from 1.10.1993 to 28.10.1993 and a basic pay of Rs.4420/- from 29.10.1993 to 31.10.1993, therefore, the petitioner ought to have drawn an average basic pay of Rs.5,224/- during the last month of his retirement i.e. October 1993 which should have been taken the basic pay. Appendix-I of Punjab National Bank Employees gratuity Fund Rules as extracted above clearly lays down that in the case of officers retiring upon normal age of 57 years or after, the computation of gratuity payable to an employee shall be at the rate of one month’s basic pay last drawn by him for each completed year of service subject to a maximum of 15 months of basic pay. In the present case the petitioner had drawn basic pay of Rs.5310/- for a period from 1.10.1993 to 28.10.1993 and thereafter Rs.4420/- from 29.10.1993 to 31.10.1993. In other words an average basic pay of the petitioner was Rs.5,224/- for the month of October 1993. In the light of Regulation (2) of the Regulation 46 extracted hereinabove and Appendix-I we are of the view that the petitioner is entitled for gratuity and leave encashment at the basic pay of Rs.5,224/- and decision taken contrary by the competent authority is quashed.” 7. In the cited authority, not the basic pay drawn during the last month of the service of the then petitioner but average of basic pay of the petitioner for the month of retirement was taken for purposes of calculation of gratuity and amount of leave encashment. Decision taken to the contrary by the bank was quashed. 8. Applying ratio of this judgment, it is the average of basic pay drawn during the entire last month of his service by the petitioner is to be taken into consideration interalia gratuity and not the basic pay which was last drawn by the petitioner. The first question based in earlier part of the judgment is thus answered in favour of the petitioner and against the respondents. 9. The first question based in earlier part of the judgment is thus answered in favour of the petitioner and against the respondents. 9. For next question, plea of the petitioner is that an employer cannot create a lien on pay of the petitioner on management share of the provident fund. It is argued that for uncertain, vague and unspecified apprehensions, claim of the petitioner to his provident fund amount cannot be denied. Concedingly, the petitioner had served the respondents for more than 39 years. It is urged that the provident fund rules do not permit the respondents to withhold the bank’s contribution of the provident fund on any ground whatsoever. Reference has been made to Rule 45 of the Provident Fund Rules. It is claimed that the respondents only empower and that too recovery can be made of actual pecuniary loss caused to the bank and that too after conducting departmental enquiry and passing of appropriate orders. It is claimed that when the recovery is not even due from the petitioner, how the same could be recovered before concretisation of imposition of penalty in terms of amount? 10. During the course of arguments, it has not been denied that neither recovery as a fact nor qua its quantum has been concretised against the petitioner. Unless such exercise is done by the respondents associating the petitioner therein, cart cannot be put before the horse. Sequelly, marking of lien by the respondents on provident fund of the petitioner to the extent of share of the respondents-management cannot be sustained. Deduction would follow only if there is liability. In other words, before lien was marked by the respondents on the employer’s share of the provident fund of the petitioner, it was necessary for the respondents to establish that when there is neither any concrete liability to be paid nor the same had been arrived at, no such lien could be marked. Though the action of the respondents secures their interest under the Provident Fund Rules, no authority is constituted for deciding any dispute that may arise between the subscriber and the Government incurring any liability nor as regards its quantum. 11. In General Manager, North East Frontier Railway and others Versus Dinabandhu Chakraborty 1970 S.L.R. 382 (Supreme Court), it was held that the only forum in which the dispute can be decided is the Civil Court. 11. In General Manager, North East Frontier Railway and others Versus Dinabandhu Chakraborty 1970 S.L.R. 382 (Supreme Court), it was held that the only forum in which the dispute can be decided is the Civil Court. In the present case, circumstances are even worse for the respondents. If as per the Regulations and Rules of the Bank, there is some machinery provided to calculate deduction to be made from the provident fund for lapses of the employee, even once the amount to be recovered from an employee is quantified in terms of Rule 13 of the Punjab National Bank Employees Provident Fund Rules (for short, the Rules), the bank has first lien on the contributions made by it to the individual account together with any interest thereon to recover any such loss, damage or liability but merely on the basis of apprehensions when no such loss, damage or liability has been adjudicated against the petitioner, marking of such lien on bank’s contribution to the provident fund of the petitioner, is totally uncalled for. As per Rule 13 of the Rules, recovery of such loss by the bank is to be limited to the extent of such financial loss only, but when no such loss has been incurred or is specified by the respondents, creating of lien is bad. The second question is also answered against the respondents. 12. Sequelly, to the extent above, the petition is allowed. ------------------