Rejecting a petition filed by Canara Bank, Justice Suraj Govindaraj has pointed out that there is a special treatment for payment of gratuity both under the Payment of Gratuity Act and under the Code of Civil Procedure, 1908.
“Gratuity has been given a special protection and special treatment inasmuch as it is made absolutely clear that the gratuity amounts can neither be attached nor can any garnishee order be passed,” the judge has added. Garnishee order means a legal order issued to recover money from an individual’s wages towards the money he or she owes.
Canara Bank had sought to defend its action to adjust a sum of ₹9.85 lakh towards housing loan & a sum of ₹1.29 lakh on account of Staff Welfare Fund liability from the gratuity to be paid to D Shrimantha Pujari, a former employee.
Bank acted unilaterally: Court
Dismissing the petition, judge has noted that home loan occupies a completely different position as it would be governed by the terms of the loan agreement which is a commercial transaction between the bank and the debtor.
“Whether the debtor is an employee or not, it is the said terms of the loan that would govern the said relationship. In the present case, admittedly, there is no demand made for repayment of housing loan interest by the bank on the employee and/or after his expiry on his legal heirs/legal representatives. The bank has acted unilaterally on the basis of an alleged authorization,” Justice Suraj Govindaraj has said, while directing the petitioner bank to comply with the directions issued by the Appellate Authority under the Payment of Gratuity Act.
Shrimantha Pujari joined the bank as a peon in March 1975. Later, he was promoted as a clerk in 1987. During his service, he obtained a housing loan and was repaying the same from time to time. In 2005, disciplinary proceedings were initiated against him for misconduct. In 2006, punishment of compulsory retirement was imposed upon him. The appeal filed by him was also rejected in August 2007. He then moved the Central Government Industrial Tribunal. During the pendency of the proceedings, Pujari expired and was replaced in the proceedings by his legal heirs, wife M Shantha Kumari and their children.
The application filed by Shrimantha Pujari for release of gratuity amount was also rejected by the Controlling Authority in December 2017, holding that the bank was right in adjusting the gratuity amount to home loan and staff welfare fund. Shantha Kumari then challenged the order. On October 21, 2019, the Appellate authority set aside the order of the Controlling Authority and directed the bank to pay the gratuity along with interest at 10% per annum till the actual date of payment.