In a landmark decision, the Gujarat High Court announced that a bank has the right to withhold gratuity from an employee whose actions resulted in losses.
The order was issued after the court heard petitions filed by the bank and the employee who caused his employer a loss of Rs 19.84 crore by disbursing advances that became NPA.
The Bank of Baroda had initiated disciplinary action against its employee Amrat Patel three months before his superannuation in 2015.
The bank stated in the charge sheet issued to the employee that while he was working as a Senior Branch Manager, there were serious acts of omission and commission in the sanctioning, disbursement, and monitoring of credit facilities, which resulted in accounts becoming Non Performing Assets and causing a loss of Rs 19.84 crore.
An Inquiry Officer held that the charges were indeed proven against Patel and an order of dismissal was issued on February 12, 2016.
Following that, the bank sent him a notice, asking that he show cause why his gratuity should not be forfeited due to the bank’s loss. The bank forfeited a gratuity of Rs 12 lakh after considering his response.
Later, the Controlling Authority ruled that the employee was entitled to be paid the gratuity as per provisions of the Gratuity Act and it can be withheld only in case of dismissal from service. In this case, however, the dismissal order was passed after the employee retired.
The bank challenged the order before the high court which held that as per the regulations of the Bank of Baroda Employees (Pension) Regulations, 1995, the Bank can recover monetary loss from its employee.
The court also upheld the inquiry officer’s report that found the employee responsible for accounts turning into NPA and causing substantial loss to the bank.