Kerala High Court Directs Co-Op Bank To Release Gratuity And Provident Fund Of Employee Against Whom Surcharge Proceedings Were Pending

The Kerala High Court directed the bank to pay gratuity and provident funds to the employee against whom surcharge proceedings under Section 68 of the Kerala Co-operative Societies Act (KCS Act).The bank claimed that the retired employee is not entitled to retiral benefits as she has not paid the Rs. 3,25,53,652 surcharge fixed under Section 68 of the KCS Act. Further, she has also not obtained non-liability certificates as contemplated under Rule 198(8) of the KCS Rules.The petitioner was working as Secretary of the Mavelikkara Taluk Co-operative Bank. While she was in service, she ordered a surprise inspection at the Thazhakkara branch. A preliminary enquiry found serious lapses on the part of the Branch Manager. The Branch Manager, Cashier and Clerk was suspended by the Managing Committee. The computer inspection found there was malpractice to the tune of Rs. 14, 82,88,905 and an FIR was registered.Later, the petitioner was also suspended on the grounds of supervisory lapses. She retired while she was on suspension. No disciplinary proceedings were initiated against her. The department conducted an enquiry. Based on the enquiry report, surcharge proceedings under Section 68 of the Act were initiated. The liability of the petitioner was fixed at Rs. 3,25,53,652. There is no charge of any misappropriation against her. The amount is fixed on the grounds of supervisory lapses. The petitioner has filed an appeal before the government against the surcharge order which is pending. The petitioner approached the High Court to get her retiral benefits including gratuity, provident fund, welfare fund, terminal leave surrender and other reliefs.Justice Basant Balaji held that retiral benefits cannot be withheld under Rule 198(7) of KCS as it applies to employees against whom disciplinary action is pending. No disciplinary action is taken against the petitioner. The Court further held that the gratuity cannot be withheld under Section 4(6) of the Payment of Gratuity as it is applicable only to employees whose service was terminated due to specific reasons. The Court noted that the gratuity and employee provident fund are protected from attachment by the Payment of Gratuity Act and Employee Provident Act respectively. Therefore, the court held that the bank cannot withhold these amounts even if disciplinary action is taken in the future.The High Court referred its own decision in Mohanan Nair P. G. v Omallur Service Co-operative Bank Ltd. (2022). In that case, the Court had observed that Section 7(3) of the Gratuity Act mandates that gratuity is to be paid within 30 days from the date it becomes payable. Further, Rule 198(8) of KCS Rules also mandates that a non-liability certificate has to be issued within 30 days of retirement of the employee. The High Court in that case directed that the gratuity amount is to be paid on these grounds. The Court referred to this case and directed the bank to pay the petitioner gratuity and provident fund.Regarding other retiral benefits, the Court directed the petitioner to approach the Joint Registrar of Co-operative Societies and ordered the Registrar to take an appropriate decision in the matter.Counsel for the Petitioner: Advocates T. R. Harikumar, Arjun RaghavanCounsel for the Respondent: Advocates B. Ashok Shenoy, P. S. Gireesh, Riyal DevassyCase Number: WP(C) 1653/ 2021Case Title: Annamma Mathew v The Managing Committee of Mavelikara Taluk Co-operative Bank Ltd. and OthersCitation: 2024 LiveLaw (Ker) 596 Click Here To Read/ Download Order

Kerala High Court Directs Co-Op Bank To Release Gratuity And Provident Fund Of Employee Against Whom Surcharge Proceedings Were Pending

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Kerala High Court Directs Co-Op Bank To Release Gratuity And Provident Fund Of Employee Against Whom Surcharge Proceedings Were Pending

Manju Elsa Isac

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