Md. Ashadul Haque vs The State Of West Bengal & Ors.

Arjun Ray Mukherjee, J.

This is an appeal against an order dated 24^th January, 2025 arising out of WPA 2325 of 2024. By the said order, the learned Single Judge refused to direct the respondents to release the appellant’s gratuity until the disposal of the criminal case pending against him.

The brief facts of the appellant’s case are stated hereinbelow:

The appellant was an employee of Birbhum District Central Cooperative Bank Limited/respondent No. 5 (hereinafter referred to as ‘the respondent bank’) duly registered under the West Bengal Cooperative Societies Act, 1940 and at present governed by the West Bengal Cooperative Societies Act, 2006 (hereinafter referred to as ‘the said Act, 2006’).

The appellant retired from the service of the said bank on 31^st January, 2013, on attaining the age of superannuation. His retiral benefits were withheld by the respondent bank for a substantial period of time. All of a sudden, in 2023, the respondent bank issued a purported order dated 26^th October, 2023, whereby an allegation of siphoning of public money was levelled against the appellant. The respondent bank decided to keep the retiral benefits of the appellant in a suspense account till the determination of the financial loss to the bank. By the said order dated 26^th October, 2023, the respondent bank also formed a Committee in order to ascertain from the official records the veracity of allegations levelled against the appellant.

Since no retiral benefits were released in favour of the appellant, he filed the instant writ petition, inter alia, seeking the following reliefs:

The primary issue which came up for consideration before the learned Single Judge was whether the appellant’s retiral dues could be withheld on the ground of criminal proceedings pending against him.

The learned Single Judge, having considered the rival submissions made by the parties, passed the order dated 24^th January, 2025. The operative portion of the order is as follows:

The appellant, being aggrieved by such order, preferred the instant appeal. During pendency of the instant appeal, pursuant to an order dated 07.04.2026 passed by this Court, the gratuity amount was paid by the respondent bank to the appellant.

In view of the above, the only issue that fell for our consideration was whether the appellant was entitled to receive interest on delayed payment of gratuity. This issue was framed in the appeal vide order dated June 9, 2026, which is quoted below :-

Mr. D.K. Sengupta, learned counsel appearing for the appellant referred to Clause 19 under Appendix 5 of Rule 106 of the West Bengal Societies Rules, 2011. (hereinafter as ‘the said Rules, 2011’). Clause 19 under Appendix 5 of the said Rules, 2011 provides as follows:-

Mr. Sengupta submitted that the appellant was entitled to receive interest on the delayed payment of gratuity and the same cannot be withheld.

Per contra, Mr. Saikat Banerjee, learned Senior counsel appearing for the respondent bank also relied upon Rule 106 of the said Rules, 2011, which provides as follows:

He submitted that the above Rule was applicable to the method of recruitment and conditions of service of the officers and employees of cooperative societies except to the employees of ‘cooperative credit structure entities’. According to him, the appellant was an employee of the respondent bank, which was a cooperative credit structure entity, and in view of a specific exclusion clause in Rule 106, none of the provisions under Appendix 5 of Rule 106 of the said Rules, 2011 would apply to the appellant and thus he was not entitled to receive any retiral benefit pursuant to such provisions.

In support of his contention Mr. Banerjee relied on a judgment reported in 2025 SCC OnLine Cal 816 [Birbhum District Co-operative Bank Ltd. And others vs. Paresh Kumar Mukherjee and others]. Mr. Banerjee referred to Paragraph 28 of the said judgment which provides as follows:

Mr. Banerjee placed reliance on Section 134A of the Act of 2006 which provides as follows:

It is relevant to note that the words ‘this Chapter’ meant ‘Chapter XIIIA’ of the said Act, 2006 which dealt with ‘Special provisions applicable to the Cooperative Credit Structure Entities’.

Mr. Banerjee also relied on Section 134C[2][d] of the Act of 2006 which states as follows:

Mr. Banerjee contended that since the respondent bank, which was a Co-operative Credit Structure Entity, enjoyed autonomy in all financial and internal administrative matters including personnel policy, staffing, recruitment, posting and compensation for the audit, the bank would not be guided by the provisions of the Payment of Gratuity Act, 1972 (hereinafter referred to as the said Act, 1972).

According to Mr. Banerjee, even if, for the sake of argument, it was presumed that Rule 106 of the said Rules, 2011 applied to the appellant, but by virtue of the overriding effect of Section 134A of the said Act, 2006, the respondent bank was not liable to pay interest.

We have heard the parties.

The appellant retired from the service of the respondent bank on 31^st January, 2013 as stated hereinabove. By a notification dated 26^th December, 2012, Rule 106 of the said Rules, 2011 was amended and the employees of the Cooperative Credit Structure Entities were excluded from the purview of Rule 106 with effect from 1^st February, 2013.

Therefore, on the date of the retirement of the appellant, Rule 106 squarely applied to him and as such all provisions contained in the appendix to Chapter V under Rule 106 of the said Rules of 2011 also applied to him. The submissions of Mr. Banerjee are misconceived. The appellant was very much entitled to receive the retiral benefits which were rightly paid to him. It is an admitted fact that there was a delay in releasing the gratuity amount to the appellant and such delay is admittedly attributable to the respondent Bank. The respondent bank cannot withhold the interest on the delayed payment of gratuity on the pretext of the exclusion of ‘cooperative credit structure entities’ in Rule 106 of the said Rules, 2011 in view of the date of retirement of the appellant.

Let us now examine as to whether by invoking Section 134C[2][d] of the Act of 2006, the respondent bank can withhold the interest amount payable to the appellant.

Clause 19 under Appendix 5 of Rule 106 of the said Rules of 2011 provides that employees of a co-operative society shall be eligible to receive payment of gratuity as per the provisions of the payment of Gratuity Act, 1972. Therefore, the appellant is governed by the provisions of the said Act, 1972. The relevant provisions of Section 7 of the said Act, 1972 provides as follows:

It is also to be noted that Section 14 of the said Act, 1972 has an overriding effect over the provisions of any other enactments. Relevant provisions of Section 14 of the said Act, 1972 provide as follows:

Therefore, in view of Section 7[3-A] of the said Act, 1972, if the gratuity amount is not paid by the employer within thirty days from the date it becomes payable, the employer shall be liable to pay, from the date on which the gratuity becomes payable to the date on which it is paid, simple interest at such rate, not exceeding the rate notified by the Central Government from time to time. It is needless to mention here that the provisions of Section 4(6) of the said Act, 1972 do not apply to the case of the appellant.

In view of Section 14 of the said Act, 1972, which is a Central Act, and has an overriding effect over any inconsistent provisions of other enactments including the Act of 2006, which is a State Act, the provisions of the said Act of 1972 will prevail over any such inconsistent enactments.

It is needless to mention here that, even where no statutory provision applies, one is entitled to receive interest for delayed payment. It is now well settled that a person deprived of the use of money to which he is legitimately entitled has a right to be compensated for the deprivation by interest or damages or compensation. In this connection, reference may be made to the decision reported in Alok Shanker Pandey v. Union of India reported in (2007) 3 SCC 545. Paragraph 9 of the said judgment provides as follows:

The law laid down by a coordinate Bench of this Court in Birbhum District Co-operative Bank Ltd.[supra] cited by Mr. Banerjee does not apply to the present case. Paragraph 3 of the said judgment deals with the facts of the said case which is as follows:

The writ petitioners in Birbhum District Co-operative Bank Ltd.[supra] superannuated subsequent to the date of insertion of the words ‘cooperative credit structure entities’ in Rule 106 of the said Rules i.e. 01.02.2013, whereas, the appellant in the present appeal retired on 31^st January, 2013, i.e. prior to such substitution.

It is well settled that a little difference in facts or additional facts may make a lot of difference in the precedential value of a decision. In this connection, reference may be made to the decisions reported in 2006(12) SCC 583 [Ispat Industries Ltd. Vs. Commissioner of Customs, Mumbai] and 2014(4) SCC 626 [Dinubhai Boghabhai Solanki Vs. State of Gujarat and Others].

Therefore, the judgment passed in Birbhum District Co-operative Bank Ltd. [supra] does not come to the aid of Mr. Banerjee.

Mr. Banerjee’s further contention that the autonomous power of the respondent bank flowed from Section 134C of the said Act of 2006, which provided that the Co-operative Credit Structure Entities shall have autonomy in all financial and internal administrative matters including personnel policy, staffing, recruitment, posting and compensation for the audit, permits it to refuse interest, is contrary to law.

The word ‘autonomy’ mentioned in Section 134C means the power to govern Co-operative Credit Structure Entities in respect of areas mentioned therein independently and without unnecessary interference from outside. One may find identical provision in Article 43B of the Constitution of India which says that the State shall endeavour to promote voluntary formation, autonomous functioning, democratic control and professional management of co-operative societies.

The above provisions have nothing to do with the facts of the present case. The word ‘autonomy’ mentioned in Section 134C of the said Act of 2006 does not empower the respondent Bank to deprive a citizen of his legitimate right nor can it be used as a device by the respondent bank to punish a retired employee in a manner which is not permissible in law. The appellant was allowed to retire in 2013 and only in 2023 the allegations were levelled against him.

Before parting, we feel it necessary to say a few words on the ‘delayed payment of retiral dues’ in case of an employee. An employee, who is entitled to receive his service benefits within the time frame prescribed by law [in normal cases immediately after his retirement], if deprived of such benefits by the employer on some arbitrary grounds, and thereafter if the payment is made by the employer pursuant to a direction of a Court at a belated stage, the employer, by making such payment, does not do any favour to the employee. It is neither an act of grace nor a compassion on the part of the employer, but it is an employee’s right under the law. The act of withholding the retiral dues by the employer for more than 13 years without any valid justification, is highly reprehensible. In our view, withholding legitimate service benefits, particularly retiral benefits, without any valid reasons is an act contrary to the service rules. It not only causes immense hardship to the employee at the fag end of his life, but also puts his entire family in a tremendous financial crisis. An employer cannot violate the service conditions of an employee and resort to such means as an act of reprisal, for whatever reasons, thereby circumventing the law.

For the reasons set out by us hereinabove, we have no hesitation in holding that, by withholding the gratuity and then the interest portion payable to the appellant on delayed payment of gratuity, the respondent bank had enriched itself unlawfully. The entire action of the respondent bank suffers from the vice of malice and the same is wholly illegal.

Coming to the order impugned before us, we find that the learned Single Judge was of the opinion that gratuity was not payable to the appellant till the conclusion of the criminal proceeding. However, we find from the records that, although no disciplinary proceeding was initiated against the appellant during his service, the criminal proceeding was initiated four years after his superannuation. The bank has not been able to satisfy us that the service rules permit withholding of gratuity payable to an employee during pendency of any criminal proceeding against the said employee, even after retirement. Under such circumstances, the order impugned being erroneous is set aside.

In view of the above, the order under appeal dated 24^th January, 2025 is set aside.

We direct the respondent bank to pay interest at “… the rate notified by the Central Government for repayment of long-term deposits”. We further direct that in case no such notification has been issued, the appellant would be entitled to interest @ 8% per annum from the date of entitlement of gratuity till the date of disbursement thereof. We also impose costs of Rs. 50,000/- to be payable to the appellant by the respondent bank. The respondent bank shall positively pay the interest amount and the amount of cost within a period of three weeks from the date of the order. The respondent bank shall furnish a copy of the notification of the Central Government and a calculation of the interest amount to the appellant while making the payment on the direction hereinabove.

The appeal stands allowed.

No order as to costs.

Urgent photostat certified copies of this judgment, if applied for, be supplied to the parties on compliance of all necessary formalities.

I Agree.

Later,

Mr. Banerjee, learned counsel for the respondent Nos. 3 to 5 seeks stay of operation of this judgment and order. The prayer is considered and rejected.

I Agree.