The District Consumer Disputes Redressal Forum District Office Premises, Kolar 563 101. consumer case(CC) No. CC/09/58
K.S.Sarojamma
...........Appellant(s)
Vs.
The President/Special Officer,
...........Respondent(s)
BEFORE:
Complainant(s)/Appellant(s):
OppositeParty/Respondent(s):
OppositeParty/Respondent(s):
OppositeParty/Respondent(s):
ORDER
CC Filed on 04.08.2009 Disposed on 11.11.2010 BEFORE THE DISTRICT CONSUMER DISPUTES REDRESSAL FORUM, KOLAR. Dated: 11th day of November 2010 PRESENT: Sri. G.V.HEGDE, President. Sri. T.NAGARAJA, Member. Smt. K.G.SHANTALA, Member. --- Consumer Complaint No. 58/2009 Between: K.S. Sarojamma, W/o. late. Anjaneya Reddy Aged about 57 years, House No. 53, Opposite Ramaiah Floor Mill, Keelukote, Kolar. .Complainant V/S 1. The President/Special Officer, Kolar District Co-operative Central Bank Limited, Kolar. 2. The Managing Director, Kolar District Co-operative Central Bank Limited, Kolar. .Opposite Parties ORDERS This is a complaint filed under section 12 of the Consumer Protection Act, 1986 praying for a direction against the opposite parties to pay the pensionery benefits payable by OPs on the death of complainants husband late. Anjaneya Reddy who was an employee of D.C.C Bank Limited, Kolar with interest at 22% p.a. from 05.12.2004 till the date of payment and to pay costs and compensation, etc., 2. The material facts of complainants case may be stated as follows: That one Anjaneya Reddy was the husband of complainant. The said Anjaneya Reddy joined service on 22.10.1970 in D.C.C Bank Ltd., Kolar (for short OP-Bank). He served in that Bank nearly for 34 years and he died on 05.12.2004 while in service. It is alleged that on the death of Anjaneya Reddy certain pensionery benefits and arrears of pay and charge allowance etc., became payable as per service conditions of that employee and the OPs who were incharge of OP-Bank failed to settle the claim and pay it to the complainant. It is alleged that she made representations on 20.12.2004, 16.11.2005, 11.10.2006, 02.02.2009, 28.02.2009 and 01.04.2009 to settle the amount payable to her and inspite of it the OPs failed to pay it. It is alleged that during the lifetime of Anjaneya Reddy he had obtained different loans with high rate of interest and those creditors are pressing for repayment of the loans and interest and that the huge interest is accumulating day by day on those loans. It is alleged that if the pensionery benefits and other dues were settled in time the complainant would have cleared those loans and would have avoided payment of huge interest. Therefore she filed the present complaint on 04.08.2009. 3. In response to the notices issued to the OPs, OP.2 sent his version dated 15.09.2009 through his Manager on behalf of both OPs. It is admitted that late. Anjaneya Reddy was serving in OP-Bank as alleged and that he died on 05.12.2004 while in service and it is stated that at the time of his death Anjaneya Reddy was working as Junior Manager in D.C.C Bank Ltd., Kolar. It is stated that subsequent to the death of Anjaneya Reddy his son A. Janardhan was appointed as Junior Assistant on compassionate ground as per the Rules and Regulations. It is stated that on the death of late. Anjaneya Reddy a sum of Rs.29,740/- was payable towards encashment of earned leave and another sum of Rs.1,73,880/- was payable towards gratuity. The OPs have taken the following grounds to justify or defend the delay in settlement of retiral benefits due on the death of late Anjaneya Reddy: (a) that the Bank has been facing financial difficulty from 2003, (b) that the employee late Anjaneya Reddy while serving in different branches was found to have misappropriated certain amounts and the audit reports of those branches for relevant years showed that Rs.43,000/- was misappropriated while working in Chintamani APMC Branch, Rs.47,000/- was misappropriated while working in Bangarpet APMC Branch and Rs.1,42,000/- was misappropriated while working in Malur Branch and that there were observations in the audit reports that these amounts were to be recovered from late. Anjaneya Reddy (c) that the late. Anjaneya Reddy had borrowed long term loan and housing loan from Kolar District Central Bank Employees Co. Op. Soc. Ltd., Kolar (for short Society) and towards these loans a sum of Rs.2,96,046/- were due including interest and that the said Society was insisting for repayment of both the loans and interest due from late. Anjaneya Reddy from out of the retiral benefit of that employee. Further it is stated in the version that the OPs are ready to pay the balance retiral benefits after deducting the amounts due from late. Anjaneya Reddy as stated above. The version further states that in the background of these facts this Forum may pass suitable order. In the subsequent version filed on 25.02.2010 it is stated that as per the office order dated 27.11.2009 an amount of Rs.29,740/- towards encashment of earned leave and a sum of Rs.1,73,880/- towards gratuity were sanctioned and out of it, the misappropriated amount of Rs.43,485/- shown in the audit report for 2003-04 relating to Chintamani APMC Branch and a sum of Rs.3,08,231/- payable to the Society including interest as on 31.01.2010 were ordered to be adjusted. Further it is contended that late. Anjaneya Reddy was not entitled to any charge allowance and that encashment of surrender leave for a block period during his lifetime was already paid. By way of further version filed on 13.07.2010 it is stated that Rs.1,67,142/- was paid on 22.02.2010 to Society towards the clearance of long term loan and interest and towards payment of a portion of interest due on housing loan of that Society. Further that a sum of Rs.43,485/- is adjusted on 22.02.2010 towards the misappropriated amount shown in the audit report relating to Chintamani APMC Branch for the year 2003-04 and the balance of Rs.11,445/- was credited to the S.B. account of complainant on 27.04.2010. The total amount sanctioned towards encashment of earned leave of Rs.29,740/- and gratuity amount of Rs.1,73,880/- comes to Rs.2,03,620/-. The total amount adjusted towards various dues as noted above comes to Rs.2,10,627/- and further an amount of Rs.11,445/- was credited to the S.B. Account of complainant. Therefore the total payment comes to Rs.2,22,072/-. Therefore it appears under some other head like arrears of salary/arrears of increment a sum of Rs.18,458/- must have been sanctioned and adjusted/paid. There is no mention in this version under which head this Rs.18,458/- was sanctioned which was payable to deceased Anjaneya Reddy. 4. The complainant filed affidavits and documents in support of her contentions. The OPs filed documents in support of their defence. But they have not filed affidavit by way of evidence. The son of complainant by name Janardhan assisted the complainant and the Manager of OP-Bank appeared and submitted the details of the facts. We heard the arguments addressed by them. It is submitted on behalf of complainant that the gratuity amount could not be adjusted by the OPs towards any dues payable by late. Anjaneya Reddy. Further that the gratuity should be calculated as per the Payment of Gratuity Act 1972 as it is more beneficial than the Gratuity payable under the Staff Service Rules of OP-Bank. Further it is submitted that the claim of Society towards housing loan, is false and that the said Society has filed an arbitration case before the Arbitrator and Assistant Registrar for Co-Op. Societies, Kolar Sub-Division, Kolar and in that case the complainant and others have disputed the borrowing of housing loan by deceased Anjaneya Reddy and the claim of the Society in this regard. However it is admitted that long term loan was taken from that Society and a part of it was repaid and an arbitration case filed by the Society in this regard was not contested and an award was passed in that case. Further it is contended that the amounts shown in the audit objections were not liable to be paid by late. Anjaneya Reddy and he had not misappropriated any amounts and that adjustment of Rs.43,485/- towards audit objection of Chintamani APMC Branch for the year 2003-04 is not valid and legal. On the other hand it is submitted on behalf of OPs that deceased Anjaneya Reddy had executed the required bond authorizing to adjust the arrears of housing loan from out of the gratuity. Further it is submitted that the audit objection for the year 2003-04 relating to Chintamani APMC Branch clearly indicates that the amount of Rs.43,485/- was recoverable from late. Anjaneya Reddy. The complainant claimed interest at 22% p.a. for the delayed payments of retiral benefits. On the other hand it is contended on behalf of OPs that the delay was not due to the intentional fault of OPs and therefore interest need not be awarded for the delay in settlement of retiral benefits. The Manager of OP-Bank submitted that in case of revision of pay the arrears payable to late. Anjaneya Reddy would be drawn and paid to complainant. He also submitted that if by mistake or oversight any other benefit is not paid, that would be paid to complainant. The complainant has consented for the adjustment of amount due towards long term loan to the Society. Advocates had not appeared for any of the parties. We also intended to ascertain whether the grievance of the complainant could be entertained by this Forum. It is submitted on behalf of complainant that the grievance of complainant can be entertained by this Forum. 5. From the rival contentions the following points arise for our consideration: Point No.1: Whether this Forum has jurisdiction to entertain the complaint? Point No.2: Whether the complainant is entitled to claim gratuity as per the provisions of the Payment of Gratuity Act 1972, if it is more beneficial to her? Point No.3: Whether the adjustments of housing loan claimed by the Society and of audit objection relating to Chintamani Branch for the year 2003-04, are lawful and valid? Point No.4: Whether there is inordinate delay in sanctioning retiral benefits on the part of OPs? Point No.5: To which reliefs the complainant is entitled to? Point No.6: To what order? 6. After considering the records and submissions of parties our findings on the above points are as follows: Point No.1: The complainant relied upon AIR 2008 (NOC) 677 (NCC) (N.C.D.R.C, New Delhi) between Venkatesh and others V/s. Vishwanath and others. In this decision it is held as follows: (A) Consumer Protection Act (68 of 1986), S. 2(1)(d)(ii) Consumer Definition Employee of Co-operative Bank Claim of gratuity amount after retirement Employee being consumer within meaning of Act, complaint would be maintainable. In the unreported decision of our Honble State Commission in Appeal No. 86/2007 decided on 14.09.2007 between Vyavasa Seva Sahakara Bank Limited and another V/s. K.R. Dhaneshewarappa and others, it is held in para. 6 of the judgement that Retiral benefits are payable by the employer for having availed the services of the employee. Non-payment of retiral benefits amounts to Deficiency in Service. The OP-Bank is registered under the provisions of the Karnataka Co-operative Societies Act 1959. In the above decisions also the OP was a Society or a Bank registered under the said Act. The facts stated in the decision of our Honble State Commission are almost similar to the facts of the present case. Therefore we have no hesitation in holding that the present complaint can be entertained by this Forum. Accordingly point No.1 is held in affirmative. Point No.2: The OP-Bank has framed Staff Service Rules relating to its employees. Para.2 of Rule 103 of said Staff Service Rules states as follows: The mode of applicability and the payment of Gratuity to an employee of the Bank shall be either as per K.S.C. Rules or as per payment of Gratuity Act whichever is beneficial to the employees. The remaining paras in the said Rule 103 describes the mode of calculation of gratuity and its entitlement. Almost similar Rule is framed under Sub Rule- 4 of Rule 18 of the Karnataka Co-Operative Societies Rules 1960. The K.S.C Rules referred in para. 2 of the Staff Service Rules noted above is said to be referring to the Karnataka Co-Operative Societies Rules 1960. This fact is not disputed by OPs during argument. The above said para.2 of Rule 103 of Staff Service Rules makes it very clear that the mode of applicability and the payment of gratuity to an employee shall be either as per K.S.C Rules or as per Payment of Gratuity Act whichever is beneficial to the employee. Therefore while calculating the gratuity one should calculate the gratuity becoming payable under Payment of Gratuity Act as well as under the Rule 103 of Staff Service Rules and then one should find out which is more beneficial to the employee. In the present case, it is admitted on behalf of OPs that the gratuity becoming payable under the Payment of Gratuity Act 1972 is not calculated. Therefore we hold that the complainant is entitled to Gratuity under the Payment of Gratuity Act 1972 if it is more beneficial to her. Accordingly point No.2 is held in affirmative. Point No.3: It is submitted on behalf of the OPs that the deceased Anjaneya Reddy had executed an agreement on 18.03.2003 in favour of the Society agreeing to pay the balance of principal and interest remaining unpaid at the time of his retirement or death out of the gratuity. In support of it a copy of the agreement taken in K.F.C Form No. 41 is produced. The relevant paragraph of the said agreement is as follows: And it is hereby last agreed and declared that the society shall be entitled to recover the balance of the said advance with interest remaining unpaid at the time of his retirement or death preceding retirement from his policy amount in the part of the Gratuity-or-Death-Cum-Retirement Gratuity that may be sanctioned to him. Ignoring the wrong framing of sentence we may assume that the deceased employee had agreed to pay the balance principal and interest remaining due at the time of his retirement or death, out of the gratuity payable to him or to his legal heirs. It is an agreement between the Society and the deceased Anjaneya Reddy. This agreement is shown to have been attested by the then Manager D.C.C Bank Limited, Mulbagal Branch as a witness. Sub Rule 2 and 3 of Rule 103 of Staff Service Rules prescribe the circumstances under which Gratuity can be forfeited by the employer. The said Staff Service Rules do not prescribe that an agreement made by the employee with a third person for discharging loan out of gratuity is binding on the employer. No specific rule is pointed out to this effect even under the Karnataka Co-Op. Societies Act or Rules. On behalf of complainant the following para at page 49 from the book Practical Guide to Payment of Gratuity by Learned Author H.L. Kumar, is relied upon which reads as follows: Adjustment of Loan Against Gratuity The husband of the petitioner was employed with the Bank and expired while in service. The Bank did not make the payment of gratuity due to the husband of the petitioner on the ground that the husband of the petitioner had availed loans amounting to Rs.2,72,522 and the amount of gratuity of Rs.1,09,480 has been adjusted against the loans. The petitioner being aggrieved from the decision of the Bank, challenged the decision of the Bank. It has been held that the employer Bank was duty bound to pay the amount of gratuity under the Payment of Gratuity Act to be calculated as per the formula given in the said Act itself as an employee cannot pledge or permit adjustment of the amount of gratuity before it had accrued to him. The provisions of the Payment of Gratuity Act as well as section 60 of CPC were amended to keep entire amount of gratuity out of the purview of attachment or other adjustments and when the law prohibits attachment or adjustments of gratuity, the Bank is not entitled to adjust the same towards repayment of loans etc. Hence, the petition of the Bank dismissed. (Yada Laxmi v. A.P. State Co-operative Bank, 2006 (108) FLR 1178: 2006 LLR 451 (AP HC) It is submitted on behalf of complainant that the complainant and others have denied the existence of housing loan to the Society and that the Society has filed an arbitration case which is pending in JRB/DA NAM/586/2009-10 on the file of A.R.C.S, Kolar and the complainant and others have contested that case and it is still pending for adjudication. In view of the above decisions and the fact that the very liability towards housing loan is in dispute, the OPs could not have adjusted the amount claimed by the Society alleging to be the amount due towards principal and interest in respect of housing loan. The version shows that only a portion of housing loan interest amounting to Rs.97,399/- is adjusted out of the retiral benefit payable to deceased Anjaneya Reddy. The complainant disputed the adjustment of Rs.43,448/- towards audit objection relating to Chintamani APMC Branch for the year 2003-04. The OPs have not produced any document or even they have not alleged that during the lifetime of deceased Anjaneya Reddy he had admitted his liability to pay the amount shown in this audit objection. In the absence of such admission by deceased Anjaneya Reddy we think the OPs could not have adjusted this amount without a proper enquiry, unless fixing the liability on the deceased. Section 69 of the Karnataka Co-Op. Societies Act 1959 prescribes the procedure to be followed in respect of recovery of the amount shown in the audit objection. Admittedly that procedure is not followed and no order is passed by the competent authority for recovery of that amount. The complainant or other legal heirs have also not admitted the said liability. Therefore we think the adjustment towards audit objection is not valid and legal. For the above reasons we hold point No.3 in affirmative. Point No.4: The employee Anjaneya Reddy died on 05.12.2004 while he was in service. The encashment of earned leave benefit of Rs.29,740/- and gratuity of Rs.1,73,880/- payable on the death of the employee, were sanctioned on 27.11.2009 subject to certain deductions as narrated earlier. The justification for delay in sanctioning the retiral benefits stated by OPs, is already narrated in para.3 of this order. We carefully considered those grounds stated in the version. We think any of these reasons could not have been the ground for delay in sanctioning the retiral benefits. It is told that from 2003 onwards till now all categories of employees in OP-Bank have drawn their full salary and other benefits from time to time except some additionally granted D.A. arrears. It is also told that the honorarium and other expenses payable to Members of Managing Committee of OP-Bank were also drawn as per the entitlement. In such circumstance we think withholding of retiral benefits of a deceased employee on the ground of financial difficulty of OP-Bank cannot be justified from any angle. If there were audit objections against the deceased employee the enquiry as contemplated under section 69 of The Karnataka Co. Op. Societies Act 1959 should have been taken. Instead of initiating the proceedings under section 69 of the Societies Act 1959, simply withholding the retiral benefits has no meaning. Admittedly during the lifetime of deceased Anjaneya Reddy or subsequent to his death no such enquiry was instituted till now. As per the Audit Report of 2003-04 of Chintamani APMC Branch the misappropriated amount of Rs.43,485/- was the O.D. amount alleged to have been drawn by the deceased employee from his S.B. Account No. 2667. In respect of two other alleged misappropriated amounts relating to Bangarpet Branch and Malur Branch, the audit reports show that the deceased Anjaneya Reddy as well as another employee were jointly held liable for reimbursement of the said amounts. Therefore without an enquiry the liability of deceased Anjaneya Reddy could not have been fixed atleast in respect of audit objections relating to Bangarpet Branch and Malur Branch. Even in respect of audit objection relating to Chintamani APMC Branch it is not known which defence was available to deceased Anjaneya Reddy. Therefore without conducting an enquiry to fix the liability, one cannot say that the deceased employee was liable to reimburse the amount or he caused loss to the OP-Bank. In the absence of such enquiry there was no justification for withholding, the sanction of retiral benefits. The last ground urged in the version justifying the delay in sanctioning retiral benefit is that the deceased employee was owing certain debts towards long term loan and housing loan to the Society. If that was the case the retiral benefit should have been granted at the earliest so that the persons liable to clear the loans would have cleared the loan at the earliest and they would have saved from paying the future interest. Therefore this ground cannot be a justification for not sanctioning retiral benefits. Retiral benefits are payable by the employer for having availed the services of the employee. These benefits are earned by an employee as unpaid salary for his service. The retiral benefits become due from the date of retirement or in the case of death of an employee during service from the date of death. Usually the retirement benefits should be granted on the day of retirement itself. We think at best it should be granted within three months from the date of retirement or death of an employee who died while in service. In the present case, as noted above the employee died on 05.12.2004 and the retiral benefits were granted on 27.11.2009 that too after filing the complaint. There is almost 5 years delay in sanctioning the retiral benefits. Such delay is inexcusable. Accordingly we hold point No.4 in affirmative. Point No.5: As per the letter dated 06.12.2004 the claims of the Society as on 30.11.2004 were as follows: 1. Long Term Loan Principal Rs.40,600/- Interest Rs.1,740/- 2. Housing Loan Principal Rs.1,23,500/- Interest Rs.4,700/- Total Rs.1,79,370/- Subsequently the Society has charged interest at 17½% including penal interest on the principal. Therefore the complainant has to incur a large amount towards payment of interest. If the retiral benefits were granted within reasonable time these loans could have been cleared. The complainant requested to award interest at 22% on the delayed payment of retiral benefits. However we think it just and proper to allow interest at 12% p.a. on the delayed payment of retiral benefits. From the service records it is found that there were 83 days of E.L. at the credit of deceased Anjaneya Reddy before his death. It appears encashment of E.L. for entire 83 days was not sanctioned. The complainant submitted that certain increments were granted recently and while calculating the average monthly salary, the increment now sanctioned was not taken into consideration. The sanction order dated 27.11.2009 shows that gratuity of Rs.1,83,330/- and earned leave benefit of Rs.27,292/- were sanctioned. But in the version different figures are shown towards these heads. It appears there might be some clerical or arithmetical error in the version. It is submitted on behalf of OPs that if any such arithmetical error has occurred by omission or inadvertence that would be corrected. It is found that the Gratuity should be calculated as per the provisions of the Payment of Gratuity Act 1972 in case it is beneficial to complainant. It is found that the adjustment of Rs.97,399/- paid to the Society towards the discharge of a portion of arrears of interest of housing loan and the adjustment of Rs.43,485/- towards audit objection of Chintamani APMC Branch for the year 2003-04 are not valid and lawful. These amounts should be paid to complainant by the OP-Bank. Therefore on this point we hold that the complainant is entitled to the above reliefs. Point No.6: For the reasons stated above we pass the following: O R D E R The complaint is allowed with costs of Rs.1,000/-. The OPs shall pay (Rs.97,399/- + Rs.43,485/- adjusted wrongly) totally Rs.1,40,884/- to complainant with interest at the rate of 12% p.a. from 31.03.2005 the date on which pensionary benefits should have been granted, till the date of payment. The OPs shall calculate the gratuity as per the provisions of the Payment of Gratuity Act 1972, in case it is beneficial to complainant and shall pay the difference with interest at the rate of 12% p.a. from 31.03.2005 till the date of payment. The OPs shall pay interest at 12% p.a. on Rs.69,743/- (adjusted towards long term loan of the Society) from 31.03.2005 till 22.02.2010. The OPs shall verify the correctness of calculation towards payment of earned leave benefit for 83 days which was said to be due in the leave account of deceased Anjaneya Reddy and shall pay the difference if any to complainant with interest at the same rate as stated above till the date of payment. The OPs shall verify whether monthly average pay was calculated properly for the purpose of calculating payment of earned leave benefit and gratuity after taking into consideration the increments subsequently granted. Further the OPs shall pay any other retiral benefits payable on the death of deceased Anjaneya Reddy as per the service conditions. The OPs shall comply with the above order within 45 days from the date of this order. Dictated to the Stenographer, corrected and pronounced in open Forum this the 11th day of November 2010. MEMBER MEMBER PRESIDENT
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