Canara Bank vs Lalit Popli on 6 December, 2017

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                                                                    NON-REPORTABLE

                              IN THE SUPREME COURT OF INDIA

                              CIVIL APPELLATE JURISDICTION

                              CIVIL APPEAL NO. 9666 OF 2010



         CANARA BANK AND ANOTHER                                    ..APPELLANTS

                                             VERSUS

         LALIT POPLI (DEAD) THROUGH LRS.                           ..RESPONDENTS




                                    JUDGMENT

MOHAN M. SHANTANAGOUDAR, J.

1. The judgment dated 12.09.2008 in LPA No. 553 of 2008

passed by the Division Bench of the High Court of Delhi is called in

question in this appeal.

2. Brief facts leading to this appeal are:

The respondent – Lalit Popli, who is now dead and

represented through his legal heirs, was employed as a clerk in
Signature Not Verified

Digitally signed by
SARITA PUROHIT
Date: 2017.12.06
17:24:43 IST

appellant’s bank and was dismissed from service on 30.06.1995,
Reason:

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consequent upon a departmental enquiry in which he was found

guilty of fraudulently withdrawing an amount of Rs.1,07,000/- from

the saving account of a customer. The Manager of the Bank (Shri

Meenakshisundaram), an officer (Shri S.S. Bhutani) as well as

Special Assistant (Shri Rakesh Tyagi) was also indicted and they

were also found guilty of negligence in relation to the very same

incident. The disciplinary authority by its order dated 18 th

September, 1994 awarded the punishment of ‘censure’ to the

Manager of the Bank (Shri Meenakshisundaram) and ordered

recovery of Rs.77,000/- from him. Likewise, the disciplinary

authority by its order dated 23rd January, 1995 awarded the

punishment of ‘censure’ to Shri S.S. Bhutani and Shri Rakesh Tyagi

and ordered recovery of Rs.15,000/- from each of them. The

appeals filed by the said three employees challenging the orders of

the disciplinary authority were also dismissed and they did not

carry the matter any further and they deposited the amount, as

ordered against them.

Insofar as the respondent – Lalit Popli is concerned, the

disciplinary authority by its order dated 30 th June, 1995 awarded

the punishment of ‘dismissal from service’.
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3. The respondent preferred Writ Petition (Civil) No. 2269 of

1995 challenging the order of dismissal, which came to be allowed

by learned Single Judge of the High Court vide his order dated 7 th

August, 1998 and the order of dismissal was set aside. The

appellant – Bank filed an appeal against the order of the learned

Single Judge of the High Court being LPA No. 465 of 1998. During

the pendency of the Letters Patent Appeal before the High Court, it

was decided by the bank to withhold an amount of Rs.74,180.09,

payable to the respondent, which included the gratuity and

provident fund(employer’s contribution) and to keep the same in a

fixed deposit with a view to adjust the said amount towards any

loss caused to the bank by the respondent. LPA No. 465 of 1998,

after hearing, was allowed by the Division Bench of the High Court

and the order of dismissal was restored. Further appeal by the

respondent was dismissed by this Court by a detailed judgment on

18.02.2003 (reported as Lalit Popli vs. Canara Bank, (2003) 3 SCC

583).

After the dismissal of the matter by this Court, the

respondent made number of representations to the bank to release

the amount of gratuity and the employer’s contribution towards
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provident fund, which was held up by the bank, by pointing out

that the bank had already recovered the entire amount of loss

caused to the bank from the other three employees as mentioned

supra, and therefore it was not justified on the part of the bank in

withholding the terminal benefits payable to the respondent. The

bank replied to the respondent that since the matter was sub judice

before the Court, the bank was unable to accede to his request.

After the dismissal of the matter by this Court, the bank vide its

order dated 24.06.2003 decided to recover the amount of

Rs.1,07,000/- from the respondent and to refund the amount

already recovered from the other three employees, to them. By

then, the amount of Rs.74,180.09, which was kept in a fixed

deposit, had attained the maturity value of Rs.1,08,923/-. The

bank ordered that out of Rs.1,08,923/-, an amount of

Rs.1,07,000/- be adjusted against the loss caused to the bank by

the respondent, who had withdrawn the said amount by forging the

signature of the account holder. Though, the bank had earlier

decided to recover the said amount from the respondent, the bank

could not recover from the respondent since the matter as against

the respondent was sub judice before the Courts of law at various
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stages. Only after the litigation ended in finality up to this Court,

the bank passed an order to recover Rs.1,07,000/- from the

respondent and therefore the bank adjusted Rs.1,07,000/- out of

Rs.1,08,923/- (the maturity value of Rs.74,180.09), towards loss

caused to the bank by the respondent and remaining amount of

Rs.1,923/- was released in favour of the respondent.

4. Being aggrieved by such action of the bank, the

respondent approached the High Court by preferring Writ

Petition(Civil) No. 6149 of 2003, which came to be allowed by the

learned Single Judge of the High Court holding that the bank had

already recovered the loss caused to the bank from the other three

employees, who were indicted and punished in relation to the very

incident and therefore any further amount sought to be recovered

from the respondent would be impermissible inasmuch as the bank

would be doubly enriching itself. The order of the learned Single

Judge is affirmed by the Division Bench of the High Court in LPA

No. 553/2008, which is impugned before this Court in this appeal.

5. Heard learned counsel for the parties, who argued in

support of their respective cases.

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6. This Court in the first round of litigation by its judgment

dated 18.02.2003 had given a categorical finding that it was the

respondent who committed forgery which ultimately led to the loss

caused to the bank. Thus, his case stood on a different footing from

the other three employees. Since the amount recovered from the

other three employees, who were imposed penalty of ‘censure’, is

refunded to them, the bank had to recover the amount of loss

caused to it from the person who was the author of the forgery.

Looking to the material on record, we find that the other

three officials were held to be negligent in their duty and as held by

this Court in its judgment dated 18.02.2003, that it was the

respondent, who committed forgery of the signature of the account

holder, consequent upon which the bank had suffered loss to the

tune of Rs.1,07,000/-. Therefore, the bank has taken an equitable

decision to recover the entire amount from the respondent and to

refund the amount already recovered from the other three officials,

because they were only found to be negligent in their duty.

7. Rule 12 of the Canara Bank Employees’ Gratuity Fund

Rules (for short, ‘Gratuity Rules’), Clause 19 of the Canara Bank

Staff Provident Fund Regulations, 1994 (for short, Provident Fund
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Regulations) and Rule 3(4) of Chapter VIII of the General Conduct

Rules, governing the services of the employees fully support the

action taken by the bank against the respondent in withholding the

amount of gratuity and employer’s contribution towards provident

fund.

8. Rule 3(4) of Chapter VIII of the General Conduct Rules

states that “an employee who is dismissed for misconduct shall not

be entitled to gratuity”.

Rule 12 of Gratuity Rules reads thus:

“Rule 12. Notwithstanding anything contained in the
preceding Clauses where an employee has been
dismissed for misconduct and such misconduct has
caused financial loss to the Bank, he shall not be
eligible to receive the gratuity to the extent of the
financial loss caused to the Bank.”

Likewise, Clause 19 of Provident Fund Regulations reads

thus:

“Clause 19. If a member causes financial loss to the
Bank by misconduct, fraud, gross negligence or other
conduct of like nature and is dismissed from the
service of the Bank or is permitted to leave the service
of the Bank in consequence of such misconduct,
fraud, gross negligence or other like conduct, the
amount of such financial loss sustained by the Bank
shall be deduced by the Trustees from the Bank’s
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contribution out of the amount due to the member and
be paid to the Bank.”

Special Rules relating to gratuity, mentioned supra,

makes it amply clear that the employee who has been dismissed for

his misconduct and if such misconduct has caused financial loss to

the bank, he shall not be eligible to receive the gratuity to the extent

of financial loss caused to the bank. So also, Clause 19 of the

Provident Fund Regulations permits the bank to deduct the

payment of provident fund to the extent of financial loss caused to

the bank from the bank’s contribution. Both the aforementioned

Clauses are plain and simple. They are unambiguous. Since Rule

12 of the Gratuity Rules and Clause 19 of the Provident Fund

Regulations permit the bank to withhold gratuity and deduct the

bank’s contribution towards provident fund, in such matters, the

bank was justified in recovering the amount of financial loss

sustained by it, which was caused by the respondent, from out of

the gratuity and employer’s contribution towards provident fund

payable to the respondent/employee.

9. Thus, in our considered opinion, the High Court was not

justified in setting aside the decision of the bank to recover the
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amount of loss sustained by it from the respondent, particularly

when the bank is empowered to do so, as discussed supra.

Accordingly, the instant appeal is allowed. The judgment and order

passed by the Division Bench of the High Court in LPA No.

553/2008 dated 12.09.2008 dismissing the appeal filed by the

bank, as also, by the learned Single Judge of the High Court

allowing Writ Petition(C) No.6149 of 2003 dated 30.05.2008 filed by

the respondent are set aside and the Writ Petition(C) No. 6149 of

2003 filed by the respondent stands dismissed and it is held that

the bank has rightly recovered the loss of Rs.1,07,000/- sustained

by it from the respondent. However, there shall be no order as to

costs.

……………………………………J.

                              [ARUN MISHRA]



NEW DELHI;                    …………………………………….J.

DECEMBER 6, 2017. [MOHAN M. SHANTANAGOUDAR]

Article source: Supreme Court

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