Bank Employees' Gratuity Can't Be Adjusted Against Their Outstanding Loan: Karnataka High Court - 26th October 2022

Bank Employees' Gratuity Can't Be Adjusted Against Their Outstanding Loan: Karnataka High Court

  Contents News/Article Date:   26^th October 2022 Relating to which Act:  The Payment of Gratuity Act, 1972 Applicable to which State:  All States and Union Territories Type:     Karnataka High Court Judgement -   A single judge bench of Justice Suraj Govindaraj thus dismissed a petition filed by the Canara Bank questioning the order of Appellate Authority which Pertains to Title: M/S CANARA BANK v. M SHANTHA KUMARI Relevance of this news:  Karma Management Global Consulting Solutions Pvt. Ltd is in the business of Payroll, Outsourcing, and Regulatory Compliances since its inception in 2004 since then, has brought in a lot of efficiencies and technological upgradations with experts on its role, to ease the hassles of Payroll Processing, Temp Staffing On-boarding Management, Regulatory and Payroll compliances by providing customized solutions to all its elite clients. Now Karma Global is also entirely into labour compliance for nearly 18 years and is helping both establishments and workers for the fulfillment of obligations as per the laws of the land.  It has over 200 staff, both direct and indirect on its rolls and operates on a Pan India basis.  Recently, it has diversified into foreign shores, into countries like the US, UK, UAE, Canada, Philippines, and Asia for handling payroll, outsourcing, recruitment, and governance. In this instance, the Karnataka High Court has held that the gratuity amount payable to a bank employee cannot be adjusted by the bank with his outstanding loan amount. The bench said, "Home loan is governed by the agreement of loan. It is for the Bank to act in terms of the said agreement and exercise all rights under

Case Title: M/S CANARA BANK v. M SHANTHA KUMARI

Case No: WRIT PETITION NO. 11463 OF 2020

Citation: 2022 Live Law (kar) 414

Date of Order: 13TH DAY OF SEPTEMBER 2022

Subject: Bank Employees' Gratuity Can't Be Adjusted Against Their Outstanding Loan: Karnataka High Court For greater details, appended below is the complete news item

 Karnataka HC Rules That Bank Employees’ Gratuity Can’t Be Adjusted Against Their Outstanding Loan

  Karnataka HC: Bank employees’ gratuity can’t be adjusted against their outstanding loan The single judge bench of Justice Suraj Govindaraj dismissed a petition filed by the Canara Bank and held that the gratuity amount payable to an employee cannot be adjusted by the bank with his outstanding loan amount.  In the case, M/S Canara Bank vs. M. Shantha Kumari, the husband of the respondent in the case, joined Canara Bank in 1975 as a peon and was later promoted as a clerk in 1987. He availed a Housing Loan which was being repaid from time to time. In 2005, disciplinary proceedings were taken up against him with allegations of gross misconduct. Punishment of compulsory retirement was imposed in 2006.  He filed an application for the release of the gratuity amount, which was rejected. He approached the Controlling Authority to seek directions to make the payments. The bank stated that there were dues to be received for the Housing loan as well as on account of the Staff Welfare Fund. Hence, these dues need to be adjusted against the gratuity amount.  The bench noted that there is a special treatment for payment of gratuity, both under the Payment of Gratuity Act and also under the Code of Civil Procedure, 1908. As per them, the gratuity was given special protection and the gratuity amount cannot be attached.  The court took notice of the petition, where-in the bank sought to adjust a sum of around Rs. 9.85 lakhs towards a housing loan and Rs. 1.29 lakhs on account of Staff Welfare Fund liability. It observed that while the Staff Welfare Fund comes within the domain of the service conditions, the home loan is a different proposition. The terms of the loan agreement, which is a commercial transaction between the bank and the debtor, govern the home loan. This is irrespective of whether the debtor is an employee of the bank.  The court also noted that the employee made the claim for gratuity only in 2017 i.e., after attaining the age of superannuation.  The court directed the bank to comply with the earlier order of the appellate authority and proceeded to dismiss the petition by the bank.   

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