1

NON-REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 9666 OF 2010

CANARA BANK AND ANOTHER    ..APPELLANTS

VERSUS

LALIT POPLI (DEAD) THROUGH LRS. ..RESPONDENTS

J U D G M E N T

MOHAN M. SHANTANAGOUDAR, J.

1. The judgment dated 12.09.2008 in LPA No. 553 of 2008

passed by the Division Bench of the High Court of Delhi is called in

question in this appeal.

2. Brief facts leading to this appeal are:

The  respondent  –  Lalit  Popli,  who  is  now  dead  and

represented through his legal heirs, was  employed  as  a  clerk  in

appellant’s  bank and was dismissed from service on 30.06.1995,

2

consequent upon a departmental enquiry in which he was found

guilty of fraudulently withdrawing an amount of Rs.1,07,000/- from

the saving account of a customer.  The Manager of the Bank (Shri

Meenakshisundaram),  an  officer  (Shri  S.S.  Bhutani)  as  well  as

Special Assistant (Shri Rakesh Tyagi)  was also indicted and they

were also found guilty of  negligence in relation to the very same

incident.   The  disciplinary  authority  by  its  order  dated  18th

September,  1994  awarded  the  punishment  of  ‘censure’  to  the

Manager  of  the  Bank  (Shri  Meenakshisundaram)  and  ordered

recovery  of  Rs.77,000/-  from  him.   Likewise,  the  disciplinary

authority  by  its  order  dated  23rd January,  1995  awarded  the

punishment of ‘censure’ to Shri S.S. Bhutani and Shri Rakesh Tyagi

and  ordered  recovery  of  Rs.15,000/-  from  each  of  them.   The

appeals filed by the said three employees challenging the orders of

the  disciplinary  authority  were  also  dismissed  and  they  did  not

carry the matter  any further and they deposited the amount,  as

ordered against them.

Insofar as the respondent – Lalit Popli is concerned, the

disciplinary authority by its order dated 30th June, 1995 awarded

the punishment of ‘dismissal from service’.  

3

3. The respondent preferred Writ Petition (Civil) No. 2269 of

1995 challenging the order of dismissal, which came to be allowed

by learned Single Judge of the High Court vide his order dated 7th

August,  1998  and  the  order  of  dismissal  was  set  aside.   The

appellant – Bank filed an appeal against the order of the learned

Single Judge of the High Court being LPA No. 465 of 1998.  During

the pendency of the Letters Patent Appeal before the High Court, it

was decided by the bank to withhold an amount of Rs.74,180.09,

payable  to  the  respondent,  which  included  the  gratuity  and

provident fund(employer’s contribution) and to keep the same in a

fixed deposit with a view to adjust the said amount towards any

loss caused to the bank by the respondent.  LPA No. 465 of 1998,

after hearing, was allowed by the Division Bench of the High Court

and the order of  dismissal  was restored.   Further appeal  by the

respondent was dismissed by this Court by a detailed judgment on

18.02.2003 (reported as Lalit Popli vs. Canara Bank, (2003) 3 SCC

583).

After  the  dismissal  of  the  matter  by  this  Court,  the

respondent made number of representations to the bank to release

the  amount  of  gratuity  and  the  employer’s  contribution  towards

4

provident fund, which was held up by the bank, by pointing out

that  the  bank  had  already  recovered  the  entire  amount  of  loss

caused to the bank from the other three employees as mentioned

supra, and therefore it was not justified on the part of the bank  in

withholding the terminal benefits payable to the respondent.  The

bank replied to the respondent that since the matter was sub judice

before the Court,  the bank was unable to accede to his request.

After the dismissal of the matter by this Court, the bank vide its

order  dated  24.06.2003  decided  to  recover  the  amount  of

Rs.1,07,000/-  from  the  respondent  and  to  refund  the  amount

already recovered from the  other  three  employees,  to  them.   By

then,  the  amount  of  Rs.74,180.09,  which  was  kept  in  a  fixed

deposit,  had  attained  the  maturity  value  of  Rs.1,08,923/-.   The

bank  ordered  that  out  of  Rs.1,08,923/-,  an  amount  of

Rs.1,07,000/- be adjusted against the loss caused to the bank by

the respondent, who had withdrawn the said amount by forging the

signature  of  the  account  holder.   Though,  the  bank  had  earlier

decided to recover the said amount from the respondent, the bank

could not recover from the respondent since the matter as against

the respondent was sub judice before the Courts of law at various

5

stages.  Only after the litigation ended in finality  up to this Court,

the  bank  passed  an  order  to  recover  Rs.1,07,000/-  from  the

respondent and therefore the bank adjusted Rs.1,07,000/- out of

Rs.1,08,923/-  (the  maturity  value  of  Rs.74,180.09),  towards loss

caused to the bank by the respondent and remaining amount of

Rs.1,923/- was released in favour of the respondent.

4. Being  aggrieved  by  such  action  of  the  bank,  the

respondent  approached  the  High  Court  by  preferring  Writ

Petition(Civil) No. 6149 of 2003, which came to be allowed by the

learned Single Judge of the High Court holding that the bank had

already recovered the loss caused to the bank from the other three

employees, who were indicted and punished in relation to the very

incident and therefore any further amount sought to be recovered

from the respondent would be impermissible inasmuch as the bank

would be doubly enriching itself.  The order of the learned Single

Judge is affirmed by the Division Bench of the High Court in LPA

No. 553/2008, which is impugned before this Court in this appeal.

5. Heard  learned  counsel  for  the  parties,  who  argued  in

support of their respective cases.

6

6. This Court in the first round of litigation by its judgment

dated 18.02.2003 had given a categorical finding that it  was the

respondent who committed forgery which ultimately led to the loss

caused to the bank.  Thus, his case stood on a different footing from

the other three employees.  Since the amount recovered from the

other three employees, who were imposed penalty of ‘censure’,  is

refunded  to  them,  the  bank  had  to  recover  the  amount  of  loss

caused to it from the person who was the author of the forgery.

Looking to the material on record, we find that the other

three officials were held to be negligent in their duty and as held by

this  Court  in  its  judgment  dated  18.02.2003,  that  it  was  the

respondent, who committed forgery of the signature of the account

holder, consequent upon which the bank had suffered loss to the

tune of Rs.1,07,000/-.  Therefore, the bank has taken an equitable

decision to recover the entire amount from the respondent and to

refund the amount already recovered from the other three officials,

because they were only found to be negligent in their duty.

7. Rule 12 of the Canara Bank Employees’ Gratuity Fund

Rules (for short, ‘Gratuity Rules’), Clause 19 of the Canara Bank

Staff Provident Fund Regulations, 1994 (for short, Provident Fund

7

Regulations) and Rule 3(4) of Chapter VIII of the General Conduct

Rules,  governing  the  services  of  the  employees  fully  support  the

action taken by the bank against the respondent in withholding the

amount of gratuity and employer’s contribution towards provident

fund.   

8. Rule 3(4) of Chapter VIII of the General Conduct Rules

states that “an employee who is dismissed for misconduct shall not

be entitled to gratuity”.   

Rule 12 of Gratuity Rules reads thus:

“Rule 12. Notwithstanding anything contained in the preceding  Clauses  where  an  employee  has  been dismissed for  misconduct  and such misconduct  has caused  financial  loss  to  the  Bank,  he  shall  not  be eligible  to  receive  the  gratuity  to  the  extent  of  the financial loss caused to the Bank.”  

Likewise, Clause 19 of Provident Fund Regulations reads

thus:

“Clause 19.  If a member causes financial loss to the Bank by misconduct, fraud, gross negligence or other conduct  of  like  nature  and  is  dismissed  from  the service of the Bank or is permitted to leave the service of  the  Bank  in  consequence  of  such  misconduct, fraud,  gross  negligence  or  other  like  conduct,  the amount of such financial loss sustained by the Bank shall  be  deduced  by  the  Trustees  from  the  Bank’s

8

contribution out of the amount due to the member and be paid to the Bank.”

Special  Rules  relating  to  gratuity,  mentioned  supra,

makes it amply clear that the employee who has been dismissed for

his misconduct and if such misconduct has caused financial loss to

the bank, he shall not be eligible to receive the gratuity to the extent

of  financial  loss caused to the bank.  So also,  Clause 19 of  the

Provident  Fund  Regulations  permits  the  bank  to  deduct  the

payment of provident fund to the extent of financial loss caused to

the bank from the bank’s contribution.  Both the aforementioned

Clauses are plain and simple.  They are unambiguous.  Since Rule

12  of  the  Gratuity  Rules  and  Clause  19  of  the  Provident  Fund

Regulations permit the bank to withhold gratuity and deduct the

bank’s contribution towards provident fund, in such matters, the

bank  was  justified  in  recovering  the  amount  of  financial  loss

sustained by it, which was caused by the respondent, from out of

the  gratuity  and employer’s  contribution  towards  provident  fund

payable to the respondent/employee.

9. Thus, in our considered opinion, the High Court was not

justified in setting aside the  decision of  the  bank to  recover  the

9

amount of  loss sustained by it  from the respondent,  particularly

when  the  bank  is  empowered  to  do  so,  as  discussed  supra.

Accordingly, the instant appeal is allowed.  The judgment and order

passed  by  the  Division  Bench  of  the  High  Court  in  LPA  No.

553/2008  dated  12.09.2008  dismissing  the  appeal  filed  by  the

bank,  as  also,  by  the  learned  Single  Judge   of  the  High  Court

allowing Writ Petition(C) No.6149 of 2003 dated 30.05.2008 filed by

the respondent are set aside and the Writ Petition(C) No. 6149 of

2003 filed by the respondent stands dismissed and it is held that

the bank has rightly recovered the loss of Rs.1,07,000/-  sustained

by it from the respondent.  However, there shall be no order as to

costs.

……………………………………J. [ARUN MISHRA]

NEW DELHI; …………………………………….J. DECEMBER 6, 2017. [MOHAN M. SHANTANAGOUDAR]