Payment of Gratuity Act, 1972: s.4(5) and (6) – Forfeiture of gratuity is not automatic on dismissal from service. Payment of Gratuity Act, 1972: s.4 sub-sections 5 and 6 – Forfeiture of gratuity – Bipartite settlement prevailing in the appellant bank – Respondent, an employee of appellant-bank – Disciplinary proceedings – Dismissal from service – Order of forfeiture of gratuity on account of proved misconduct involving moral turpitude – High Court held that respondent was entitled to gratuity as there was no financial loss caused to bank and that as per bipartite settlement, forfeiture of gratuity is permissible only in case misconduct leading to dismissal has caused financial loss to the bank and only to that extent – Held: It was not the case of the appellant-bank that the misconduct of respondent caused any financial loss to the bank and, therefore, forfeiture, taking recourse to sub-section (6) of s. 4 was wrongly resorted to by the appellant-bank – Respondentemployee is entitled to the gratuity. Payment of Gratuity Act, 1972: s.4(6)(a) and (b) – It is not the conduct of a person involving moral turpitude that is required for forfeiture of gratuity but the conduct or the act should constitute an offence involving moral turpitude and convicted accordingly by a court of competent jurisdiction – It is not for the employer to decide whether an offence has been committed – It is for the court – In the instant case, there is no conviction of respondent for misconduct which according to bank is an offence involving moral turpitude – Therefore, there is no justification for the forfeiture of gratuity on the ground that the misconduct proved against him amounted to acts involving moral turpitude.
Payment of Gratuity Act, 1972: The Act must prevail over the Rules on Payment of Gratuity framed by the employer. Dismissing the appeal, the Court
HELD: 1. The bipartite settlement provides for forfeiture only if there is a loss caused on account of misconduct leading to dismissal, is also not in dispute. There is no case for the Bank that the misconduct of the respondent-employee has caused any financial loss to the Bank, and therefore, forfeiture, taking recourse to sub-Section (6) of Section 4 of the Act, cannot be resorted to. Thus, the respondent-employee is entitled to the protection of the bipartite settlement. [Para 15] [1002-E-F]
2. Sub-Clause (a) and sub-Clause (b) of sub-Section (6) of Section 4 of the Act operate in different fields and in different circumstances. Under sub-Clause (a) of sub-Section (6) of Section
4 of the Act , the forfeiture is to the extent of damage or loss caused on account of the misconduct of the employee whereas under sub-Clause (b), forfeiture is permissible either wholly or partially in totally different circumstances. Sub-Clause (b) operates either when the termination is on account of- (i) riotous or (ii) disorderly or (iii) any other act of violence on the part of the employee, and under Sub-Clause (ii) of sub-Section (6)(b) when the termination is on account any act which constitutes an offence involving moral turpitude committed during the course of employment. ‘Offence’ is defined, under The General Clause Act, 1897, to mean “any act or omission made punishable by any law for the time being in force”. [Paras 16, 17] [1003-B-D]
3. It is not the conduct of a person involving moral turpitude that is required for forfeiture of gratuity but the conduct or the act should constitute an offence involving moral turpitude. To be an offence, the act should be made punishable under law. That is absolutely in the realm of criminal law. It is not for the Bank to decide whether an offence has been committed. It is for the court. Apart from the disciplinary proceedings initiated by the appellantBank, the Bank has not set the criminal law in motion either by registering an FIR or by filing a criminal complaint so as to establish that the misconduct leading to dismissal is an offence involving moral turpitude. Under sub-Section (6)(b)(ii) of the Act, forfeiture of gratuity is permissible only if the termination of an employee is for any misconduct which constitutes an offence involving moral turpitude, and convicted accordingly by a court of competent jurisdiction. In the present case, there is no conviction of the respondent for the misconduct which according to the Bank is an offence involving moral turpitude. The requirement of the statute is not the proof of misconduct of acts involving moral turpitude but the acts should constitute an offence involving moral turpitude and such offence should be duly established in a court of law. [Paras 18, 20] [1003-E-G; 1004-GH]
4. The Act must prevail over the Rules on Payment of Gratuity framed by the employer, therefore, the appellant cannot take recourse to its own Rules, ignoring the Act, for denying gratuity. [Para 21] [1005-A]
Beed District Central Coop. Bank Ltd. v. State of Maharashtra and others (2006) 8 SCC 514 : [2006] 6 Suppl. SCR 895 ; Y. K. Singla v. Punjab National Bank and others (2013) 3 SCC 472 : [ 2012] 13 SCR 1189; Jaswant Singh Gill v. Bharat Coking Coal Limited and others (2007) 1 SCC 663 : [2006] 8 Suppl. SCR 1064 – relied on.
As published in the Supreme Court Reports, Supreme Court of India. Text from the Indian Supreme Court Judgments open data set (Dattam Labs), CC BY 4.0.
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