# Rakesh Kumar Tyagi v. State of U.P. & Ors

- **Citation:** (2025) 6 ILRA 124
- **Court:** High Court of Judicature at Allahabad
- **Decided:** 2025-06-06
- **Case number:** Writ - A No. 18453 of 2024
- **Bench:** J.J. Munir
- **Source:** https://unisonlegal.in/judgment/allahabad-high-court/rakesh-kumar-tyagi-v-state-of-u-p-ors-53562
- **Pages:** 15

## Headnote

Law
-
Constitution
of
India,1950 - Article 226 & 300A -
Payment of Gratuity Act,1972-Section
4(6)-U.P.
Cooperative
Societies
Employees
Service
Regulations,1975Regulations 84 and 96- withholding of
gratuity and dues-The petitioner , a
retired Senior Branch Manager of the
District
Cooperative
Bank
Limited
Ghaziabad challenged the withholding of
Rs. 19.25000 from his post retirement
benefits by the Bank-The amount was
retained due to loans he had sanctioned,
which
later
became
non-performing
assests(NPAs)-The court held that such
recovery was illegal in the absence of any
disciplinary
proceedings
or
criminal
conviction-Gratuity
and
post-retiral
benefits are protected u/s 4(6) of the
Act,1972
and
Article
300A
of
the
Constitution
-Recovery
from
such
benefits is impermissible unless services
were terminated for proven misconductAdministrative
decisions
or
internal
resolutions cannot override these legal
protections-Thus, Impugned orders and
resolution
quashed-Bank
directed
to
release withheld amount with interest.
(Para 22 to 35)

List of Cases cited:

## Text

_Characters 0–39,880 of 46,484. This is a partial read: ask again with offset=39880 for what follows._

124 INDIAN LAW REPORTS ALLAHABAD SERIES
their onward and safe transmission to the
respondents.

20. Let a copy of this order be
communicated to the Principal Secretary
(Fisheries), Government of U.P., Lucknow,
the Director (Fisheries), Directorate of
Fisheries, U.P., Lucknow, the Finance and
Accounts Officer, Directorate of Fisheries,
U.P., Lucknow and the Deputy Director
(Fisheries), Kanpur Division, Kanpur by
the Registrar (Compliance).
----------
(2025) 6 ILRA 124
ORIGINAL JURISDICTION
CIVIL SIDE
DATED: ALLAHABAD 06.06.2025

BEFORE

THE HON'BLE J.J. MUNIR, J.

Writ - A No. 18453 of 2024

Rakesh Kumar Tyagi ...Petitioner
Versus
State of U.P. & Ors. ...Respondents

Counsel for the Petitioners:
Sujeet Kumar Rai

Counsel for the Respondents:
C.S.C., Satyam Singh

A.
Service
Law
-
Constitution
of
India,1950 - Article 226 & 300A -
Payment of Gratuity Act,1972-Section
4(6)-U.P.
Cooperative
Societies
Employees
Service
Regulations,1975Regulations 84 and 96- withholding of
gratuity and dues-The petitioner , a
retired Senior Branch Manager of the
District
Cooperative
Bank
Limited
Ghaziabad challenged the withholding of
Rs. 19.25000 from his post retirement
benefits by the Bank-The amount was
retained due to loans he had sanctioned,
which
later
became
non-performing
assests(NPAs)-The court held that such
recovery was illegal in the absence of any
disciplinary
proceedings
or
criminal
conviction-Gratuity
and
post-retiral
benefits are protected u/s 4(6) of the
Act,1972
and
Article
300A
of
the
Constitution
-Recovery
from
such
benefits is impermissible unless services
were terminated for proven misconductAdministrative
decisions
or
internal
resolutions cannot override these legal
protections-Thus, Impugned orders and
resolution
quashed-Bank
directed
to
release withheld amount with interest.
(Para 22 to 35)

List of Cases cited:

1. U.P. Coop. Union & ors. Vs Prabhu Dayal
Srivastava & ors.(1988) SCC Online All 302

2. St. of Jhar. & ors. Vs Jitendra Kr. Srivastava &
anr.(2013) 12 SCC 210

(Delivered by Hon'ble J.J. Munir, J.)

1. The petitioner questions an order of
the Chief Executive Officer, District
Cooperative Bank Limited, Ghaziabad
dated 18.11.2024 and the resolution of the
Committee of Management of the said
Bank
dated
08.10.2024,
in
effect,
withholding a sum of Rs.19,25,500/- out of
his post retiral benefits on account of loan
disbursed by the petitioner, that have turned
into non-performing assets, allegedly due
to callous disbursement of those loans to
customers.

2. The petitioner retired from service
of the District Cooperative Bank Limited,
Ghaziabad (for short, 'the Bank') as a
Senior Branch Manager on 31.12.2022. He
entered service of the Bank as a Clerk-cumCashier on 12.07.1988, steadily earning his
promotions to the post of a Senior Branch
Manager that he held at the time of
retirement. It is the petitioner's case that he
had an unblemished service record. Upon
6 All. Rakesh Kumar Tyagi Vs. State of U.P. & Ors.
125
retirement, all that was paid to him was his
contributory provident fund and nothing
else. The petitioner, therefore, made an
application dated 01.01.2024 to the Chief
Executive Officer of the Bank, requesting
the release of his post retiral benefits and
explaining his position in regard to some
loans that he had sanctioned, which turned
into non-performing assets.

3. On 18.01.2024, the petitioner
moved another application, pointing out the
lapse on part of other incumbents in the
office of the Branch Manager, where the
loans had become non-performing assets in
not taking timely steps to recover. He
moved
yet
another
application
on
12.03.2024 to the Bank, claiming release of
his post retiral benefits in their entirety.
Still another application was made by the
petitioner on 16.04.2024 to the Bank,
pointing out that in view of the provisions
of the Payment of Gratuity Act, 1972, the
gratuity of a retired employee can neither
be forfeited nor adjusted.

4. Failing in all endeavours under
the Uttar Pradesh Co-operative Societies
Act, 1965 (for short, 'the Act of 1965'), the
petitioner caused a legal notice dated
22.06.2024 to be served upon the Bank
through his learned Advocate. Upon this
demand, the Bank responded to the legal
notice through a memo dated 26.07.2024
addressed to the learned Counsel and
another dated 22.08.2024 addressed to the
petitioner, which in sum and substance
show on one hand the total outstanding post
retiral dues in the petitioner's favour with
their break-up, and, on the other, the total
sum of money, that had become a nonperforming asset on account of loans
allegedly sanctioned by the petitioner, in a
callous fashion, in favour of ten loanees.
The particulars of those loans were also
indicated.
In
substance,
these
two
memoranda indicate that the dues of the
petitioner
stand
at
a
figure
of
Rs.33,61,045/-, whereas the total sum of
loans
sanctioned
by
the
petitioner
negligently, that have turned into nonperforming assets account for a figure of
Rs.19,25,397.77 as on 22.07.2024.

5. The post retiral dues standing to
the petitioner's credit, to which he was
entitled upon retirement, are payable under
the following heads:

Sl.
No.
Item
Amount
1
Bonus

221561.00
2
Incentive

135862.00

3
Gratuity

2624146.00

4
GroupInsurance

94079.00

5
Earned Leave

285397.00

Total

336
1045.00

6. On the other, the total sum of
Rs.19,25,397.77, which account for the
Bank loans, sanctioned and disbursed by
the petitioner, that have turned nonperforming assets, are depicted below in
tabular form:

Sl.
No
Borrow
er's
Name

Fath
er's /
Husb
and's
Nam
e

Address

Lo
an
Ac
co
unt
Nu
mb
er

Status as on
22.07.2024
126 INDIAN LAW REPORTS ALLAHABAD SERIES

Or
igi
nal

I
n
t
e
r
e
s
t

T
o
t
a
l

1
Neeraj

Parm
a
nand

H.No. 93,
Village
Nagla
Aankhu,
P.S.
Niwadi,
Tehsil
Modinag
ar,
Ghaziaba
d

80
80/
15
0
89
77
6

8
4
7
8
8
.
6
8

7
4
5
6
4
.
6
8

2
Inderpa
l
Shis
hram
Village
Hridaypu
r
Mandola,
Tehsil
Modinag
ar,
Ghaziaba
d

80
80/
15
2

16
51
49

1
5
2
2
4
9
.
9
7
3
1
7
3
9
8
.
9
7

3
Pawan
Kumar

Vish
amba
r

Village
Latifpur
Tibda,
Tehsil
Modinag
ar,
Ghaziaba
d

80
80/
16
4
42
75
5

-

4
2
7
5
5
.
0
0

4
Rajend
ra

Ragh
uvee
r

Village
Nagla
Aankhu,
P.S.
Niwadi,
Tehsil
Modinag
ar,
Ghaziaba
d

80
80/
16
6

83
48
3

9
5
5
9
4
.
9
8

1
7
9
0
7
7
.
9
8

5
Hanif

Maq
sood

Village
Nagla
Aankhu,
Tehsil
Modinag
ar,
Ghaziaba
d
80
80/
16
7

81
07
4
8
8
7
9
8
.
1
4
1
6
9
8
7
2
.
1

4

6
Brijmo
han

Saty
a
prak
ash
Village
Nagla
Aankhu,
Tehsil
Modinag
ar,
Ghaziaba
d

80
80/
16
8
10
21
30

1
1
1
8
0
5
.
7
9

2
1
3
9
3
5
.
7
9

7
Rakesh
Devi

Brah
m
Sing
h

Village
Nagla
Aankhu,
Tehsil
Modinag
ar,
Ghaziaba
d

80
80/
17
0
89
70
8
9
1
0
6
8
.
7
8

1
8
0
7
7
6
.
7
8

8
Shobin
der
Budd
h
Sing
h

Village +
Post
Patla,
Ghaziaba
d

80
80/
17
4
10
44
55
1
1
7
8
8
7
.
4
2
2
2
2
3
4
2
.
4
2

9
Jitende
r
Kumar

Tilak
Ram

Village +
Post
Bhaneda
Nagla
Aankhu,
Ghaziaba
d

80
80/
17
5

93
91
2

1
0
2
8
0
3
.
0
9

1
9
6
7
1
5
.
0
9

10
Raj
Kumar

Baler
am

Village +
Post
Patla,
Ghaziaba
d

80
80/
17
7
10
68
29

2
1
1
2
9
.
9
2

2
2
7
9
5
8
.
9
2

 Total Sum: 19,25,397.77
6 All. Rakesh Kumar Tyagi Vs. State of U.P. & Ors.
127
 7. Apparently, therefore, the
Bank proposed to withhold a part of the
petitioner's post retiral benefits, subject to
realization of their non-performing assets
on account of the loans sanctioned by the
petitioner while in service, and recover the
Bank's lost money from the petitioner's
retirement
benefits.
The
petitioner,
therefore, instituted Writ-A No.13459 of
2024 before this Court, where this Court
passed the following order on 03.09.2024:

 "Heard Sri Sujeet Kumar Rai,
learned counsel for the petitioner and Sri
Satyam Singh, learned counsel for the
contesting respondent Nos. 2 & 3.

 By means of this petition filed
under Article 226 of the Constitution,
petitioner has questioned the notices issued
o him dated 26th July, 2024 and 22nd
August, 2024, whereby he has been
directed to furnish his explanation qua
certain dues with regard to the non
performance of assets in respect of the loan
disbursed by him while he was Senior
Branch Manager of the society. He submits
that the notice is virtually a direction
instead of asking a simplicitor reply.

 Sri
Satyam
Singh,
learned
counsel for the respondent Nos.- 2 & 3
does not have any objection in the event
petitioner is directed to represent the
matter against the notice and any further
action is taken only after the disposal of the
objection/ representation of the petitioner.

 In view of the above, this petition
stands disposed of with a direction to the
petitioner to furnish reply to the notices
issued to him within a period of four weeks
from today and in the event any such reply
is made as directed in here above, the same
shall be disposed of first after giving full
opportunity of hearing to him within a
further period of one month.

 It is further provided that until a
final decision is taken in the matter as
directed
herein
above,
no
recovery
pursuant to the notice shall be pursued
against the petitioner."

8. In compliance with the said
order, the Bank issued a notice to the
petitioner dated 01.10.2024, calling him for
a personal hearing before the Committee of
Management of theirs on 08.10.2024 at 10
o'clock in the morning hours at the Bank
Headquarters.
On
08.10.2024,
the
petitioner appeared before the Bank's
Committee of Management, submitting that
he had filed his reply on 12.09.2024, which
may be taken into consideration. At the
time, this petition was instituted, the
petitioner knew the result of the orders
made by the Committee of Management
and the consequential orders of the Chief
Executive Officer, but he did not have with
him a copy of the decision taken by the
Committee of Management. The result of
the
decision
of
the
Committee
of
Management
was
that
a
sum
of
Rs.19,25,000/- has been invested in an
FDR standing in the petitioner's name with
the Raj Nagar Branch of the Bank, but with
the Bank's lien marked on the said sum of
money.

9. The FDR for the sum of
Rs.19,25,500/- has been pledged by the
Bank in their favour, though the instrument
stands in the petitioner's name. A photostat
copy of the said FDR dated 17.10.2024 is
available on record at page No.70 of the
paper-book. The date of maturity is
17.10.2025. There is an endorsement across
its face, which read: "Pledge - Zila Sahkari
Bank Ltd. Ghaziabad. PLEDGE. Sd./- Br.
128 INDIAN LAW REPORTS ALLAHABAD SERIES
Manager". The balance of Rs.14,35,554/-
due on account of the petitioner's post
retiral benefits has been remitted to the
petitioner's
account,
releasing
it
unconditionally
in
his
favour.
The
petitioner made a request for the provision
of a copy of the resolution passed by the
Committee
of
Management
dated
08.10.2024, by which a substantial sum of
his post retiral benefits was directed to be
withheld in the FDR, invested in his own
name, but to no avail.

10. Aggrieved by the non-payment
of the balance of his post retiral benefits
and deprived of the right of being served
with a copy of the Committee of
Management's
resolution
dated
08.10.2024, authorizing retention of the
unpaid part of his retirement benefits, the
petitioner has instituted the present writ
petition
under
Article
226
of
the
Constitution. He prayed, amongst others,
that the resolution of the Bank, directing
the withholding of a part of his post retiral
benefits, may be summoned from the
respondents and quashed. The petitioner
has further prayed that a writ of mandamus
be granted by this Court, ordering the third
respondent,
the
Secretary
&
Chief
Executive Officer of the Bank, to release
the FDR, bearing No. 0002196, illegally
pledged by the Bank in their favour for a
sum of Rs.19,25,500/- together with
interest.

11. Vide order dated 25.11.2024,
we required the Secretary & Chief
Executive Officer of the Bank to appear in
person and show cause why a copy of the
order, passed in compliance with our order
dated 03.09.2024 in Writ-A No.13459 of
2024, had not been furnished to the
petitioner. On the next date, when the
matter came up, an affidavit along with an
exemption application has been filed on
behalf of respondent No.3. Along with this
affidavit, a copy of the order dated
18.11.2024 passed by the Chief Executive
Officer of the Bank, directing retention of
the petitioner's fund and its investment in
the FDR in compliance with the Committee
of Management's resolution, was enclosed
as Annexure No.1 to the CEO's affidavit.
This Court, accordingly, proceeded to issue
a notice of motion by a detailed order dated
02.12.2024. In compliance, respondent
Nos.2 and 3 filed a counter affidavit dated
08.12.2024.
Along
with
the
counter
affidavit, a copy of the resolution of the
Committee of Management, authorizing
retention of the petitioner's post retiral
benefits and their investment in the FDR,
pledged in the Bank's favour was also
enclosed. This resolution is one dated
08.10.2024 and annexed as Annexure No.2
to the counter affidavit. Now, therefore, it
is the order of the Chief Executive Officer
dated 18.11.2024 and the resolution of the
Committee of Management of the Bank
dated 18.10.2024 that the petitioner wants
us to quash and grant him a mandamus for
the substantial relief that he desires. The
parties having exchanged affidavits, when
the petition came up on 09.12.2024, it was
admitted to hearing, which proceeded
forthwith. Judgment was reserved.

12. Heard Mr. Sujeet Kumar Rai,
learned Counsel for the petitioner, Mr.
Satyam
Singh,
learned
Counsel
for
respondent Nos.2 and 3 and Mr. Girijesh
Kumar Tripathi, learned Additional Chief
Standing Counsel appearing on behalf of
the State.

13. The question in this case, that
requires consideration is, if for the Bank's
accounts, that have become non-performing
assets, may be due to some negligence on
6 All. Rakesh Kumar Tyagi Vs. State of U.P. & Ors.
129
the petitioner's part in drawing up papers
relating to loans advanced during his time,
can the petitioner's post retiral benefits be
withheld
without
holding
disciplinary
proceedings against him? We do not think so.
There is no pension for the petitioner
admissible under the Rules and the break-up
of his post retiral benefits, in the earlier part
of the judgment, would show that out of his
total post retiral benefits, that is to say, a sum
of
Rs.33,61,045/-,
Rs.26,24,146/-
are
comprised of the component of gratuity
payable. Now, gratuity under the Uttar
Pradesh Co-operative Societies' Employees
Service Regulations, 1975 (for short, 'the
Regulations of 1975') framed under the Act
of 1965, is dealt with under Chapter VII,
Regulation 95 of the Regulations of 1975.
Regulation 95 is all that is there about
gratuity under the Regulations of 1975.
Regulation 95 reads:

 "95.
Gratuity.-
(i)
A
cooperative society may by a resolution of its
committee of management allow to its
employee gratuity equivalent to not more
than 15 days' salary for every complete
year of service(part of the year if less than
six months, to be ignored), if he has
attained the age of superannuation or has
been declared invalid for service by the
Civil Surgeon or has been retrenched or
dies while in service:

 Provided he has put in ten years
of
continuous
service
immediately
preceding
retirement,
invalidation,
or
retrenchment or five year's continuous
service in case of death, as the case may be.
In case of death gratuity shall be payable to
the nominee of the employee and in the
absence of nomination, to his legal heir.

 (ii) For purposes of meeting its
obligations under clause (I), a co-operative
society may create Employees' Gratuity
Fund."

14.
Regulation
103
of
the
Regulations of 1975 reads:

 "103. The provisions of these
regulations
to
the
extent
of
their
inconsistency, with any of the provisions of
the Industrial Disputes Act, 1947, U. P.
Dookan
Aur
Vanijya
Adhishthan
Adhiniyam,
1962,
Workmen's
Compensation Act, 1923 and any other
labour laws for the time being in force, if
applicable to any co-operative society or
class of co-operative societies, shall be
deemed to be inoperative."

15. The clear purport of Regulation
103 of the Regulations of 1975 is that these
regulations,
to
the
extent
they
are
inconsistent with the provisions of the
Industrial
Disputes
Act,
1947,
the
Workmen's Compensation Act, 1923 and
any other labour law for the time being in
force, if applicable to any cooperative
society or a class of such society, shall be
deemed to be inoperative. In other words,
in case of conflict between any provision of
the Regulations of 1975 and the provisions
of the named statutes in Regulation 103, or
any other labour laws for the time being in
force, the provisions of the Regulations of
1975 would yield to the named statutes or
any other conflicting labour laws.

16. Now, the Act of 1972 would
certainly fall in the class of 'any other
labour laws for the time being in force',
mentioned in Regulation 103, but to see if
the provisions of the Act of 1972 would
exclude the Regulations of 1975, it would
have to be determined if there
is
inconsistency between the provisions of the
Act of 1972 and the Regulations of 1975.
130 INDIAN LAW REPORTS ALLAHABAD SERIES
As we read the provisions of the two
statutes, any inconsistency, that may be
there, can be about the computation of
gratuity, that is provided under Regulation
95 of the Regulations of 1975, or the
eligibility to receive gratuity. There is
nothing in Regulation 95 of the Regulations
of 1975 or elsewhere in those regulations,
that may conflict with the other provisions
of the Act of 1972, relating to payment of
gratuity to the employees of a Cooperative
Society, whose terms and conditions of
service are governed by the Regulations of
1975.

17. The foremost question is if the
Act of 1972 would apply to a co-operative
society, like the respondents, engaged in
the business of banking. Section 1 of the
Act of 1972 reads:

 "1.
Short
title,
extent,
application
and
commencement.-(1)
This Act may be called the Payment of
Gratuity Act, 1972.

 (2) It extends to the whole of
India:

 Provided that in so far as it relates
to plantations or ports, it shall not extend to
the State of Jammu and Kashmir.

 (3) It shall apply to-

 (a) every factory, mine, oilfield,
plantation, port and railway company;

 (b) every shop or establishment
within the meaning of any law for the time
being in force in relation to shops and
establishments in a State, in which ten or
more persons are employed, or were
employed, on any day of the preceding
twelve months;
 (c) such other establishments or
class of establishments, in which ten or
more employees are employed, or were
employed, on any day of the preceding
twelve months, as the Central Government
may, by notification, specify in this behalf.

 (3-A) A shop or establishment to
which this Act has become applicable shall
continue to be governed by this Act
notwithstanding that the number of persons
employed therein at any time after it has
become so applicable falls below ten.

 (4) It shall come into force on
such date as the Central Government may,
by notification, appoint."

 (emphasis by Court)

18. The question, whether the Act
of 1972 would apply to a co-operative
society, fell for consideration before this
Court in regard to the Uttar Pradesh Cooperative Union. The Uttar Pradesh Cooperative Union is an apex co-operative
society registered under the Act of 1965. If
the co-operative union, which is after all a
society registered under the Act of 1965, has
been held by this Court to be within the ambit
of the Act of 1972, regarding it as an
'establishment'
within
the
meaning
of
Sections 1(3)(b) and 1(3)(c) of the said Act,
there is no basis to think that the Bank, who
are after all a co-operative society registered
under the Act of 1965, are not to be regarded
as an establishment within the meaning of
Sections 1(3)(b) and 1(3)(c) of the said Act.
Now, this holding of a Division Bench of our
Court in Uttar Pradesh Co-operative Union
and others v. Prabhu Dayal Srivastava
and others, 1988 SCC OnLine All 302, is to
be noted for the relevant remarks of their
Lordships. In Prabhu Dayal Srivastava
(supra), it has been held:
6 All. Rakesh Kumar Tyagi Vs. State of U.P. & Ors.
131
 "5. We are conscious that the Act
is a progressive, social and beneficial
legislation and it has to be interpreted as to
promote the purpose or object of the Act. In
such matters the construction that promotes
the purpose of legislation should be
preferred
rather
than
just
a
literal
construction. Under S. 1(3)(c) the relevant
clause is "such other establishment" in a
State in which ten or more persons are
employed or were employed on any day of
the
preceding
twelve
months.
The
preceding Cl. 1(3)(b) was "every shop or
establishment within the meaning of any
law for the time being in force in relation to
shops and establishment in a State." The
word "and" even though appears to be
conjunction, but keeping in view the
legislative intent and applying elementary
principles
of
textual
and
contextual
interpretation it appears to have the
meaning of "or" and has been accordingly,
used in a disjunctive sense. This preceding
clause under S. 1(3)(b) to the effect "every
shop or establishment within the meaning
of any law for the time being in force in
relation to shops" has got a complete
meaning with the establishment pertaining
to shops. There was no sense in using the
word "and," a conjunction, and to add
subsequent clause "establishment in a
State" in which ten or more persons are
employed. This obviously indicates that
subsequent expression "establishment in a
State" has been used in an independent and
different sense than the preceding clause
and
has
nothing
to
do
with
the
establishment in relation to shops. In our
opinion the word "and" has been used
disjuntively
to
mean
"or."
We
are
conscious that the word "or" is antithesis of
word "and" and the meaning of word "and"
has to be sparingly interpreted as "or." The
context of expression has been used under
Sub-cl. (b) or Sub-cl. (c) of S. 1(3) of the
Act. Keeping in view of the intention and
purpose of legislation to provide gratuity to
employees drawing wages up to Rs. 270
per month or otherwise. The object of the
Act can also be in brief looked into, which
is to the following effect:

 "The Bill provides for payment of
gratuity to employees drawing wages up to
Rs. 750 per month in factories, plantations,
shops, establishments and mines, in the
event
of
superannuation,
retirement,
resignation and death or total disablement
due to accident or disease. The quantum of
gratuity payable will be 15 days' wages
based on the rate of wages last drawn by
the
employees
concerned
for
every
completed year of service or part thereof in
excess of six months subject to a maximum
of 15 months' wages. The term wages
means
basic
wages
plus
dearness
allowance."

 6. In the aforesaid object of the
Act it has been clearly specified that the
employees of factories, plantations, shops,
establishments and mines have been
separately provided. It means that the
object of legislation was to provide benefit
of gratuity to establishments independently
of shops.

 7. Much emphasis was laid by the
learned counsel for petitioner on the word
"establishment" used in second clause after
the word "and." the word "establishment"
is, however, not a defined term either under
the Act or under the General Clauses Act. It
is now well-settled principle that dictionary
meaning of a word cannot be looked into in
case the word has been defined statutorily
or has been judicially defined. But where
there is no such definition or interpretation,
the Court can take the aid of dictionaries to
ascertain the meaning in common parlance.
132 INDIAN LAW REPORTS ALLAHABAD SERIES
In doing so the Court must bear in mind
that the words are used in different sense
according to its context and the dictionary
gives all the meaning of a word and the
Court would, therefore, have to select from
the meaning which would be relevant to the
contest in which it has to interpret the
words. See State of Orissa v. Titaghar
Paper Mills Company, Ltd. [1985 Supp
SCC 280 : A.I.R. 1985 S.C. 1296].

 8. It is better to have some
dictionary
meanings
of
the
word
"establishment." According to Black's Law
Dictionary
the
word
"establishment"
connotes an institute, a place where
conducted, to settle or fix firmly, place of a
permanent footing. According to Words and
Phrases (Permanent Edn.), Vol. 15, the word
"establishment" means a place where one is
permanently fixed for residence or business,
such as an office or place of business with its
fixtures. Further it means an establishment in
which employee is or was employed.
"Establishment" means merely something
established.
In
Webster's
International
Dictionary the word "establishment" means
an institute or place of business with its
fixtures
and
organized
staff.
Oxford
Dictionary defines the term "establishment"
as organized body of men maintained for a
purpose.
According
to
Bouvier,
Law
Dictionary
the
word
"establishment"
connotes
that
which
is
instituted
or
established for public or private use.

 10. In V. Transport [Private), Ltd.
v. Regional Provident Fund Commissioner,
Madras [A.I.R. 1965 Mad. 466], it means
been held that the word "establishment" has
been interpreted to mean an organization
which employs persons, where relationship of
employee
and
employer
comes
into
existence.
 11. We are accordingly of the
opinion that the word "establishment" as used
under S. 1(3)(b) or S. 1(3)(c) of the Act
connotes an organized body of men and
women employed where the relationship of
employer
and
employee
comes
into
existence. There could be no manner of doubt
that petitioner 1 has employed a number of
employees for a purpose, namely, to carry out
the duties assigned to them for the object for
which Uttar Pradesh Co-operative Union has
been established. There is no doubt that the
provisions of Gratuity Act would apply to the
employees of petitioner 1. The application of
respondent 1 was certainly maintainable and
the preliminary objection raised on behalf of
the petitioners has correctly been rejected by
the impugned order."

19. There is no serious cavil
between parties in this case that the Act of
1972 would apply to the Bank. Here, of
particular relevance is sub-Section (6) of
Section 4 of the Act of 1972, which must be
quoted in the togetherness of Section 4,
though most of the other sub-Sections might
not be directly relevant. Section 4 of the Act
of 1972 reads:

 "4. Payment of gratuity.-(1)
Gratuity shall be payable to an employee on
the termination of his employment after he
has rendered continuous service for not less
than five years,-

(a) on his superannuation,
or

 (b)
on
his
retirement
or
resignation, or

 (c) on his death or disablement
due to accident or disease:
6 All. Rakesh Kumar Tyagi Vs. State of U.P. & Ors.
133
 Provided that the completion of
continuous service of five years shall not be
necessary where the termination of the
employment of any employee is due to
death or disablement:

 Provided further that in the case
of death of the employee, gratuity payable
to him shall be paid to his nominee or, if no
nomination has been made, to his heirs, and
where any such nominees or heirs is a
minor, the share of such minor, shall be
deposited with the controlling authority
who shall invest the same for the benefit of
such minor in such bank or other financial
institution, as may be prescribed, until such
minor attains majority.

 Explanation.-For the purposes
of this section, disablement means such
disablement as incapacitates an employee
for the work which he was capable of
performing before the accident or disease
resulting in such disablement.

 (2) For every completed year of
service or part thereof in excess of six
months, the employer shall pay gratuity to
an employee at the rate of fifteen days'
wages based on the rate of wages last
drawn by the employee concerned:

 Provided that in the case of a
piece-rated employee, daily wages shall be
computed on the average of the total wages
received by him for a period of three
months
immediately
preceding
the
termination of his employment, and, for
this purpose, the wages paid for any
overtime work shall not be taken into
account:

 Provided further that in the case
of an employee who is employed in a
seasonal establishment and who is not so
employed
throughout
the
year],
the
employer shall pay the gratuity at the rate
of seven days' wages for each season.

 Explanation.-In the case of a
monthly rated employee, the fifteen days'
wages shall be calculated by dividing the
monthly rate of wages last drawn by him
by twenty-six and multiplying the quotient
by fifteen.

 (3) The amount of gratuity
payable to an employee shall not exceed
such amount as may be notified by the
Central Government from time to time].

 (4) For the purpose of computing
the gratuity payable to an employee who is
employed,
after
his
disablement,
on
reduced wages, his wages for the period
preceding his disablement shall be taken to
be the wages received by him during that
period, and his wages for the period
subsequent to his disablement shall be
taken to be the wages as so reduced.

 (5) Nothing in this section shall
affect the right of an employee to receive
better terms of gratuity under any award or
agreement or contract with the employer.

 (6)
Notwithstanding
anything
contained in sub-section (1),-

 (a) the gratuity of an employee,
whose services have been terminated for
any act, wilful omission or negligence
causing any damage or loss to, or
destruction of, property belonging to the
employer, shall be forfeited to the extent of
the damage or loss so caused;

 (b) the gratuity payable to an
employee may be wholly or partially
forfeited-
134 INDIAN LAW REPORTS ALLAHABAD SERIES
 (i) if the services of such
employee have been terminated for his
riotous or disorderly conduct or any other
act of violence on his part, or

 (ii) if the services of such
employee have been terminated for any act
which constitutes an offence involving
moral turpitude, provided that such offence
is committed by him in the course of his
employment."

20. Sub-Section (6) of Section 4
provides for contingencies, where the
gratuity payable to an employee would
stand wholly or partly forfeited. Clauses (a)
and (b) of sub-Section (6) of Section 4 of
the Act of 1972 would show that for an
employee to be liable to a forfeiture of the
whole or part of his gratuity, it is essential
in each contingency that his services should
have
been
terminated
for
some
blameworthy conduct. Thus, except for a
case
of
termination
of
service
as
contemplated under sub-Section (6) of
Section 4, the right to receive gratuity
cannot be forfeited in view of the Act of
1972.

21. Admittedly, in this case, the
petitioner
was
never
subjected
to
disciplinary proceedings or meted out any
kind of punishment while in service. He
was also never tried and convicted for a
criminal offence on account of the lapses
that the Bank impute to him in the
documentation of loans sanctioned by him
that turned non-performing assets with no
avenue for the Bank to recover from the
defaulters. He retired from service without
the blemish of disciplinary proceedings or
facing trial on criminal charges.

22. There is nothing in the
Regulations of 1975 or under any other
provision of the law, that may authorize the
respondents to withhold the petitioner's
gratuity upon his retirement. Rather, that
course is expressly forbidden by subSection (6) of Section 4 of the Act of 1972,
except in cases of termination from service
envisaged under the aforesaid provision.
Therefore, there can be no deduction, and,
a fortiori, no retention of the petitioner's
funds to the extent of sum of gratuity is
concerned. Given the admitted sum of
gratuity payable to the petitioner, the sum
of money retained and invested in the FDR
by the Bank, pledging it in their favour,
contingent upon the petitioner's success in
securing realization of the bad loans
involved, is manifestly illegal.

23. So far as the other post retiral
benefits are concerned, there is nothing in
the Regulations of 1975, or under any other
provision of the law, by dint of which any
of the petitioner's post retiral benefits may
be withheld, except when the petitioner
suffers punishment in the course of
disciplinary proceedings. Admittedly, the
petitioner was never proceeded with against
by the Bank in the exercise of their
disciplinary
jurisdiction
while
in
employment, nor was he tried on a criminal
charge in relation to the lapses that the
Bank now say he committed in the matter
of documentation for the various loans, that
were disbursed during time while the
petitioner was in office. There are two
sources of authority available with the
Bank to recover from an employee or
officer under the Regulations of 1975 for
any loss caused to the Bank. One is under
Regulation 84, occurring in Chapter VII of
the Regulations of 1975, which relates to
disciplinary proceedings, and, the other is
Regulation 96, occurring in Chapter VIII
relating to provident funds, gratuity,
security, honorarium and pay advance.
6 All. Rakesh Kumar Tyagi Vs. State of U.P. & Ors.
135
24. The penalties, which may be
imposed under Regulation 84 of the
Regulations of 1975, read:

 "84.
Penalties.-
(i)
Without
prejudice to the provisions contained in any
other
regulation,
an
employee
who
commits a breach of duty enjoined upon
him or has been convicted for criminal
offence or an offence under section 103 of
the Act or does anything prohibited by
these regulations shall be liable to be
punished by any one of the following
penalties :-

 (a) censure,

 (b) withholding of increment,
 (c) fine on an employee of
Category IV (peon, chaukidar, etc.).

 (d) recovery from pay or security
deposit to compensate in whole or in part
for any pecuniary loss caused to the cooperative
society
by
the
employee's
conduct,

 (e) reduction in rank or grades
held substantively by the employee,

 (f) removal from service, or

 (g) dismissal from service.

 ..........."

(emphasis by Court)

25. Regulation 96 (supra) reads:

 "96. Security.- (i) Employees of
co-operative societies shall furnish such
security as may be specified by the
Registrar under sub-section (1) of section
120 of the Act. It shall be recoverable in
lump sum or in such instalment as may be
required by the Registrar.

 (ii) Interest as admissible, on the
savings bank account in the post office,
shall be given on the amount of the security
of the employee concerned.

 (iii) When an employee ceases to
be in the service of the society or dies, the
security amount together with interest due
shall be refunded to the employee and in
the case of death, his heir, within a period
of 3 months from the date of completion of
audit following cessation of service or
death:

 Provided that the society shall
deduct any claim of dues outstanding
against such employee.

 (emphasis by Court)

26.
A
conjoint
reading
of
Regulation 84(i)(d) and the proviso to
Clause (iii) of Regulation 96 would show
that recovery can be made from the pay or
security deposit to compensate the society
in whole or in part for any pecuniary loss
sustained on account of their employee's
conduct as a measure of penalty or in case
of conviction for a criminal offence. Thus,
the power to recover under Regulation 84 is
limited to cases, if as a measure of
punishment in disciplinary proceedings,
loss caused by the employee to the society
is directed to be recovered from his pay or
security
deposit
envisaged
under
Regulation 96. It can also be recovered in
case of conviction for a criminal offence or
an offence under Section 103 of the Act of
1965. The provisions of Regulation 84(i)(d)
would show that the recovery of loss
caused to the society can be made only in
case of the employee being held guilty in
136 INDIAN LAW REPORTS ALLAHABAD SERIES
disciplinary proceedings and imposed with
the
penalty
of
recovery. The other
restriction is that recovery can be made
from his pay or security deposit to
compensate the society for the loss
sustained. Regulation 84 does not authorize
recovery of the loss sustained by the
society, even if the employee is held guilty
from any other sum of money due to him,
which include his post retiral benefits in
their entirety.

27. The proviso to Clause (iii) of
Regulation 96, authorizing the society to
deduct any claim of dues outstanding
against the employee, for a first would be
complementary to the society's power to
impose the punishment of recovery in
consequence of disciplinary proceedings or
conviction on a criminal charge under
Regulation 84(i)(d), and, for a second,
afford the society a source of authority to
deduct or recover any claim or dues
outstanding against the employee. The
proviso to Regulation 96, therefore, also
authorizes the society to recover any claim
of
theirs
against
an
employee
that
constitutes outstanding dues, dehors the
provisions of Regulation 84, but limits that
general authority to recover the security
deposit available in their hands.

28. There is, thus, no authority
available to the Bank under the Regulations
of 1975 to recover from any of the
petitioner's post retiral benefits, whether in
consequence of an order of penalty passed
in their disciplinary jurisdiction, or as a
result of the employee's conviction on a
criminal charge. The Bank, in this case
would, therefore, have no right to recover
from the employee's post retiral benefits,
including the ones other than gratuity, even
if an order of recovery had been passed
against him under Regulation 84 after
holding disciplinary proceedings, or in the
event of him being convicted on a criminal
charge. Here, admittedly, no proceedings
were taken against him, disciplinary or
before a Criminal Court, denuding the
respondents of their authority to recover
from whatever they could under Regulation
84.

29. The power to recover under
Regulation 84, in the petitioner's case,
would be limited to his pay or security
deposit, if he were found guilty by the
Bank of causing pecuniary loss to them in
the
exercise
of
their
disciplinary
jurisdiction. The petitioner while in service
was admittedly not proceeded with against
by
the
Bank
in
their
disciplinary
jurisdiction. The only other residual power
available to the Bank to deduct any claim
of dues outstanding against the petitioner
available under the proviso to Clause (iii)
of Regulation 96 would be limited to the
petitioner's security deposit made under the
aforesaid Regulation. The residual power
of the Bank to recover his dues does not
extend to effecting it from the petitioner's
post retiral benefits.

30. It was open to the Bank to
recover the losses they allege against the
petitioner on account of their loans that
have become non-performing assets, which
they say they cannot recover, because of
the petitioner's faulty documentation of the
loan papers relating to the defaulters by
instituting disciplinary proceedings against
the petitioner while he was in service or
proceeding against his security deposit,
whatever be its worth. While in service,
recovery
could
be
made
from
the
petitioner's pay also, besides the security
deposit envisaged under Regulation 96.
After the petitioner has retired, there is no
authority available with the Bank, either to
6 All. Rakesh Kumar Tyagi Vs. State of U.P.