Can’t withhold gratuity sans recovery proceedings: HC

Bengaluru: Without initiating proceedings for recovery, the gratuity amount cannot be withheld from a delinquent employee, the high court observed, while dismissing a petition filed by the Central Warehousing Corporation.On Dec 12, 2013, GC Bhat, a corporation employee, was dismissed for misappropriation of funds and misconduct. After seven years, Bhat approached the competent authority, claiming payment of Rs 14 lakh in gratuity dues. On Sept 11, 2023, the authority under the Payment of Gratuity Act directed the corporation to pay Bhat a gratuity of Rs 7.9 lakh with 10% interest from the date of his dismissal from service.The corporation challenged the order, arguing that Bhat's dismissal was necessitated by misappropriation of funds and causing his employer a loss of Rs 1.7 crore. The petitioner, a central govt undertaking, contended that it was entitled to withhold the gratuity and adjust the amounts towards the losses caused.Justice Suraj Govindaraj pointed out that there was further delinquency on the part of other officers as they failed to seek recovery of the losses caused by Bhat. "I'm of the considered opinion that the officers, who were duty-bound to initiate proceedings against Bhat for the losses caused to the petitioner, have failed in their duty, abdicated their responsibilities, giving rise to a cause for action to be taken against them for their delinquency in not initiating proceedings against the dismissed employee, who caused losses to the employer," the judge said."The corporation could not, without initiating proceedings for recovery, retain the gratuity amount. Without such proceedings being initiated, the contention of the employer that losses have been caused will only remain a contention and is not one which has been adjudicated upon and orders passed," the judge added. The corporation was directed to settle Bhat's gratuity on or before Jan 31, 2025.