A Bank clerk fraudulently withdraws money from customer's account. The management dismisses the employee from services of Bank and withholds retirement benefits and adjusts agaisnt the loss caused. Net amount is paid to

For the purposes of examining Bank's action of dismissal of Bank Clerk (employee) from the services of Bank, withholding retirement benefits and payment of net amount to the employee after adjustment against loss caused for fraudulent withdrawal of money from customer account following decision of Hon'ble Supreme Court in Canara Bank & Anr vs. Lalit Popli (Through LRs), Civil Appeal No. 9666 of 2010 may be looked into. In this case, Respondent who was a clerk, and two other persons i.e. manager and special assistant, all bank employees, were found guilty of fraudulently withdrawing an amount of ₹1,07,000/- from the saving account of a customer. The manager and special assistant were censured for their negligence and some recovery were made from them while the respondent was dismissed from service. Supreme Court noted that vide judgment dated 18.02.2003 a categorical finding that it was the respondent who committed forgery which ultimately led to the loss caused to the bank. Supreme Court further noted that the Respondent 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, Supreme Court found 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 ₹1,07,000/-. Accordingly, Supreme court observed that "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." Hon'ble Supreme Court also noted that 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 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. Hon'ble Supreme Court further noted that Special Rules relating to gratuity, 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. Accordingly, in view of the aforesaid decision of the Hon'ble Supreme Court in Canara Bank & Anr vs. Lalit Popli , if fraudulent withdrawal of money from Customer's account also includes act of forgery on behalf of Bank Clerk which led to the loss caused to the bank then Bank's action needs to be judged in terms of Employees' Gratuity Fund Rules of the Bank, Provident Fund Regulations of the Bank, General Conduct Rules of the Bank governing the services of the employees. Also, a proper departmental enquiry needs to be conducted for ascertaining the role of Bank Clerk and any other person involved including their role etc. Accordingly, in case, Bank Clerk role does not relate to forgery of customer signature etc., then he may be censured for negligence and the amount may be recovered as penalty subject to aforesaid Conduct rules, Provident Fund and Gratuity Rules.