The Orissa High Court (Cuttack Bench) clarified that gratuity is neither a bounty nor a bonanza, but a deferred payment of salary to an employee, and it is a recognition of his successful accomplishment of the services rendered to the employer and, therefore, is required to be paid on the date of superannuation.
The Court therefore held that the amount of gratuity can only be withheld in the event of a termination of service for an act or the things done while in the employment causing a damage or loss to the employer and not otherwise. Since in the present case, the respondent (bank employee) was made to retire after achieving age of superannuation, the incidences encompassing the Section 4(6) of the Payment of Gratuity Act, does not invite withholding of the gratuity amount.
Essentially, the statutory sum or the amount entitled to an employee under a particular Act cannot be forfeited nor be denied in absence of any power conferred upon the employer. The moment the power is to be exercised in a particular eventuality, any other eventuality cannot be impliedly engulfed into the said provision as the authority has to travel within the circumference of the statutory provision and cannot wriggle out from the provisions applicable in this regard, added the Court.
The Division Bench comprising the Chief Justice Harish Tandon and Justice M.S. Raman referred to Section 4 of the Payment of Gratuity Act, 1972 to state that the gratuity of an employee shall be forfeited to the extent of damage or loss so suffered, provided such employee has been terminated from service for any act, wilful omission or negligence which causes the damage or loss or destruction of the property belonging to the employer.
The Bench clarified that sub-section 6 of Section 4 of the 1972 Act starts with the non-obstante clause and, therefore, has an overriding effect on the preceding sub-sections of Section 4 thereof. Thus, the legislature has restricted the applicability of said provision only in the event of contingencies incorporated therein and, therefore, any transgression therefrom or imbibing any other contingencies not contemplated therein, in the action is illegal and not sustainable in law.
Briefly, in this case, the respondent, who was employed as Deputy Manager in the appellant-Bank and attained the age of superannuation, was retired from service without any blemish or disciplinary proceeding. However, her retiral benefit was withheld by the appellant just because she acted as a guarantor to a loan disbursed to a borrower, who had failed to repay loan. The respondent therefore approached the authority under the Payment of Gratuity Act, seeking release of the gratuity amount, which was granted.
Appearances:
Advocate Dr. Patanjali Tripathy, for the Appellant
AGA Sanjay Rath and Advocate S. Sunandini, for the Respondent
