The Punjab and Haryana High Court has recently dismissed an appeal filed by a bank against an order passed by a single judge directing the bank to release gratuity to a retired employee.
The appeal was heard by a division bench comprising Justice Sanjiv Prakash Sharma and Justice Meenakshi I Mehta.
The dispute arose when the bank refused to release gratuity to an employee, who was compulsorily retired from service.
The bank contended that an employee was not entitled to receive gratuity as he had been found guilty in departmental proceedings for committing forgery.
However, the employee argued that he had been honourably acquitted in a criminal case registered against him by the bank.
The single judge, in his order, directed the bank to release the employee gratuity, holding that the bank had misinterpreted the definition of moral turpitude and failed to consider that an employee had been honourably acquitted in the criminal case.
The single judge also imposed a cost of Rs. 50,000 on the bank for not filing a reply to employee ‘s writ petition for 17 years.
The bank appealed against the single judge’s order, arguing that the employee was not entitled to receive gratuity as he had been compulsorily retired from service by way of punishment.
However, the division bench rejected this contention, holding that the Payment of Gratuity Act, 1972, did not apply to officers employed with the bank.
Instead, the bank’s own regulations, specifically Regulation 46 of the Punjab and Sind Bank (Officers’) Service Regulations, 1982, governed the payment of gratuity to officers.
The division bench held that the employee was entitled to receive gratuity under Regulation 46, which provides that every officer shall be eligible for gratuity on retirement, death, disablement, resignation, or termination of service in any other way except by way of punishment, after completion of 10 years of service.
The bench rejected the bank’s contention that the employee ‘s compulsory retirement was a termination of service by way of punishment, holding that the term “termination” refers to the severance of the employer-employee relationship, which did not occur in employee’s case as he continued to draw pension from the bank.
The division bench also rejected the bank’s contention that the recovery of amounts due from the employee would affect his entitlement to gratuity, holding that the two issues were independent of each other.
The bench dismissed the appeal, upholding the single judge’s order directing the bank to release the employee’s gratuity.