Employee-Employer Dispute Over PF Forfeiture Can't Be Raised Before Consumer Forum: NCDRC

The National Consumer Disputes Redressal Commission (NCDRC), New Delhi, comprising AVM J. Rajendra (Retd.), Presiding Member and Justice Saroj Yadav, Member, allowed a revision petition filed by Dena Bank and held that a dispute concerning the forfeiture of an employee's Provident Fund contribution arising out of disciplinary proceedings and dismissal from service does not constitute a consumer dispute.

Brief Facts:

The Complainant, Prakash Rao was employed with Dena Bank. Following disciplinary proceedings concerning alleged financial irregularities, he was dismissed from service with immediate effect on July 18, 2009.

At the time, ₹7,41,706.87 had been contributed by Dena Bank towards Rao's Provident Fund. The Bank subsequently forfeited the said amount following his dismissal. The Bank stated that certain financial liabilities were recoverable from Rao and that the amount was forfeited as part of the recovery.

Aggrieved by the forfeiture, Rao filed Consumer Complaint before the District Consumer Forum, seeking refund of ₹7,41,706.87 with interest, along with compensation of ₹2 lakh for mental agony and ₹25,000 towards litigation costs.

The District Forum, however, dismissed the complaint on January 16, 2018, holding that the dispute did not relate to a consumer dispute and therefore was not maintainable before the Consumer Forum.

Rao thereafter approached the Chhattisgarh State Consumer Commission. On May 17, 2018, the State Commission partly allowed his appeal and directed the Bank to pay ₹7,41,706.87 with 9% annual interest from July 18, 2009, along with ₹20,000 compensation for mental agony and ₹5,000 as litigation costs.

Aggrieved by the State Commission's decision, Dena Bank filed a Revision Petition before the National Consumer Disputes Redressal Commission (NCDRC).

The Bank argued that the forfeiture was connected with Rao's employment and disciplinary proceedings and therefore fell within the employer-employee relationship rather than a consumer-service provider relationship.

Observation and decision:

The NCDRC observed that the forfeiture of ₹7,41,706.87 by Dena Bank was a consequence of disciplinary proceedings initiated against Prakash Rao, which ultimately resulted in his dismissal from service. The Commission noted that the Bank had also determined that ₹86.13 lakh was recoverable from Rao, and the forfeited amount formed part of the recovery sought from him.

The Commission held that the action of the Bank arose out of the employer-employee relationship between the parties. Therefore, there was no consumer-service provider relationship between Dena Bank and Rao in relation to the forfeiture of the Provident Fund contribution. Consequently, the grievance did not constitute a consumer dispute maintainable before the Consumer Forum.

Accordingly, the NCDRC allowed Revision Petition, set aside the Chhattisgarh State Consumer Commission's order dated May 17, 2018, and dismissed Rao's consumer complaint. However, the Commission granted Rao liberty to approach the appropriate forum under law for redressal of his grievance. It also directed that any amount deposited by the Bank before the District Forum, if any, be released to the Bank upon an appropriate application.

Case Title: Dena Bank v. Prakash Rao

Case No: REVISION PETITION NO. 2394 OF 2018