Can My Gratuity Be Taken for a Colleague's Unpaid Loan? Seeking Advice on Legal Rights

Dear friends,

I had guaranteed a personal loan for my colleague at work. He has already left the organization and is not paying back the loan. Now that I have also left the organization, the company has withheld my gratuity, stating that the bank has sent court orders to take my gratuity as recovery.

According to the bank, one of the forms I signed as a witness states that they have the authority to take away my gratuity as a form of recovery.

Please advise if the bank has the right to do so, and if I could lose my gratuity.

Regards,
John S.

Under normal circumstances, the amount of gratuity is not attachable. I am not sure about the banking policy regarding the attachment of gratuity, but as an employer, your company is not in a position to hold it for the bank. If the employer fails to pay your gratuity within 30 days, you will be entitled to get interest. Anyway, if the employer has not given the bank any guarantee to the effect that any payment not made by the employee will be paid by him, there is no legal relationship between the employer and the banker, but the relationship is between the banker and the employee. If the employer has agreed to deduct a sum of money every month from the salary of the employee, he is acting only as a bearer, and there does not exist any debtor-creditor relationship. At the same time, between you and the employer, there exists an employee-employer relationship which makes him liable to pay gratuity within 30 days.

Regards,
Madhu.T.K