In a significant ruling championing the principles of natural justice, the Calcutta High Court has dismissed Union Bank of India’s petition to withhold the ₹18.48 lakh gratuity of a former chief manager dismissed over alleged loan irregularities.
Justice Shampa Dutt Paul directed the controlling authority to release the deposited gratuity amount, along with accumulated interest, to the employee within 30 days. The court strongly criticized the bank’s conduct, terming its sudden move to quantify financial losses four years after the employee’s dismissal a “clear abuse of the process of law” and a mere “afterthought.”
The employee, who joined Union Bank of India in August 1987 and rose to the position of chief manager, was dismissed from service on January 22, 2019. This disciplinary action followed a March 2018 chargesheet alleging irregularities in sanctioning nearly 280 loans worth ₹61.51 crore during his tenure at the Agra Development Authority branch.
While the dismissal was upheld on appeal, the bank did not pay out or formally forfeit his gratuity at the time. The conflict escalated years later when the employee took legal action to claim his retirement benefits.
The timeline of the dispute highlights the delay:
- April 2022: The bank received a notice from the controlling authority under the Payment of Gratuity Act after the employee filed “Form-N” to claim his funds.
- November 21, 2022: For the first time, Union Bank issued a notice proposing to forfeit the gratuity, quantifying the alleged financial losses nearly four years post-dismissal.
- February 2023: The bank formally notified the employee of the forfeiture.
- June 13, 2023: The controlling authority rejected the bank’s move, ordering it to pay ₹18.48 lakh plus interest.
- March 27, 2024: The appellate authority rejected the bank’s appeal, prompting Union Bank to challenge the decision in the Calcutta High Court. The bank deposited ₹26.87 lakh with the authority to proceed with the appeal.
In its judgment, the Calcutta High Court pulled up the public sector bank for failing to establish or quantify any specific financial loss during the actual disciplinary inquiry.
“Even though the enquiry report as submitted by the petitioner runs into 400 pages, the same appears to be more of quantity than quality evidence against the workman,” Justice Shampa Dutt Paul observed.
The court pointed out that neither the original show-cause notice, the chargesheet, the 400-page enquiry report, nor the final dismissal order contained any specific quantification of the losses suffered by the bank. Under the law, such quantification is mandatory if an employer intends to forfeit an employee’s gratuity.
“Admittedly, no loss was quantified… till the notice for forfeiture of gratuity after more than four years,” the court stated. “Such conduct on the part of the petitioner prima facie proves that the same is an afterthought.”
Representing Union Bank of India, Senior Advocate Ranjay De argued that the bank’s internal regulations empowered it to forfeit gratuity to the extent of any financial loss suffered. He asserted that the exact calculation was of no consequence because the actual loss incurred by the bank—regardless of the precise figure—was inherently greater than the employee’s ₹18.48 lakh gratuity.
However, Advocate Pratik Majumder, appearing for the employee, countered that his client was never given a fair opportunity to respond to any allegations of causing specific financial damage. He emphasized that the bank remained silent on the gratuity for nearly four years, only initiating the forfeiture process after the employee formally demanded his dues.
Rejecting the bank’s arguments, the Calcutta High Court clarified that statutory laws hold precedence over internal policies, stating that Union Bank “cannot claim that the bank regulations shall prevail over the Payment of Gratuity Act.”
By failing to integrate the quantified financial loss into the original inquiry and chargesheet, the bank bypassed proper legal channels. Consequently, the High Court dismissed the bank’s pleas and ordered the immediate release of the employee’s long-delayed terminal benefits.
