1986 (7) TMI 357 - HC - Indian Laws

Court Rules Theft as Moral Turpitude, Allows Gratuity Forfeiture

The court held that theft constitutes an offence involving moral turpitude, overturning a previous judgment. It concluded that the gratuity payable to an ... Offence involving moral turpitude - theft as dishonest removal of property - forfeiture of gratuity under Section 4(6)(b)(ii) of the Payment of Gratuity Act, 1972 - conditions for applicability of forfeiture (offence under law and involvement of moral turpitude) - post amendment discretion to wholly or partially forfeit and requirement of notice and considerationOffence involving moral turpitude - theft as dishonest removal of property - Theft constitutes an offence involving moral turpitude. - HELD THAT: - The Court held that the essential ingredient of theft is dishonest removal of movable property belonging to another without consent (Section 378 IPC). Dishonesty is contrary to honesty and therefore falls within the accepted meaning of 'moral turpitude'. The Court disagreed with the contrary view in W.P. No. 13303 of 1978 that mere dishonesty does not amount to moral turpitude, and overruled that decision, observing that statutory provisions such as the Probation of Offenders Act do not negate the moral turpitude inherent in the offence of theft. [Paras 8, 9, 10]Theft is an offence involving moral turpitude.Forfeiture of gratuity under Section 4(6)(b)(ii) of the Payment of Gratuity Act, 1972 - conditions for applicability of forfeiture (offence under law and involvement of moral turpitude) - Whether gratuity stands wholly forfeited where an employee is dismissed for theft committed in the course of employment. - HELD THAT: - The Court construed Section 4(6)(b)(ii) as it stood at the relevant time to mean that where (i) the misconduct constituting the basis for termination is an offence under the law, and (ii) that offence involves moral turpitude, the gratuity payable shall stand wholly forfeited. Both conditions were found to be satisfied in the present case because the employee was found guilty of theft committed in the course of employment. [Paras 1, 5, 6, 11]Where an employee is dismissed for theft committed in the course of employment, gratuity payable stood wholly forfeited under Section 4(6)(b)(ii) as it then read.Post amendment discretion to wholly or partially forfeit and requirement of notice and consideration - Effect of the amendment to Section 4(6)(b)(ii) (with effect from 1-7-1984) on the employer's obligation and procedure for forfeiture. - HELD THAT: - The Court noted that the amendment changed the provision from mandatory forfeiture to a provision permitting the gratuity to be 'wholly or partially forfeited'. Consequently, an employer exercising this power must take an independent decision after termination, having regard to facts such as length and record of service and magnitude of the offence. The Court observed that, in view of the amended provision, the decision to forfeit must be taken after giving notice of the proposal to the employee and after due consideration of any reply. [Paras 14]After the 1-7-1984 amendment an employer must decide, after notice and considering the employee's reply, whether and to what extent to forfeit gratuity.Final Conclusion: The Writ Appeal is allowed: the Court holds that theft is an offence involving moral turpitude and, under the pre amendment text of Section 4(6)(b)(ii), gratuity payable to an employee dismissed for theft in the course of employment stood wholly forfeited; however, in view of the post 1 7 1984 amendment the employer must exercise discretion (wholly or partially) after giving notice and considering the employee's reply. The orders below are set aside and the appellant was directed to pay Rs. 3,000 to the respondent on compassionate grounds. Issues Involved:1. Whether theft is an offence involving moral turpitude.2. Whether the gratuity payable to an employee stands wholly forfeited under Section 4(6)(b)(ii) of the Payment of Gratuity Act, 1972, if the employee is terminated for theft committed during employment.Issue-wise Detailed Analysis:1. Whether theft is an offence involving moral turpitude:The primary issue addressed in this judgment is whether theft constitutes an offence involving moral turpitude. The appellant argued that theft inherently involves dishonesty, which is a key component of moral turpitude as defined in legal terms. The definition of theft under Section 378 of the Indian Penal Code (IPC) was cited, emphasizing that theft involves the dishonest removal of property without consent. The court agreed with this interpretation, stating that dishonesty is central to the offence of theft, thereby making it an act involving moral turpitude. The court disagreed with the earlier judgment in W.P. No. 13303 of 1978, which held that theft did not involve moral turpitude, and overruled this decision.2. Whether the gratuity payable to an employee stands wholly forfeited under Section 4(6)(b)(ii) of the Payment of Gratuity Act, 1972, if the employee is terminated for theft committed during employment:The court examined Section 4(6)(b)(ii) of the Payment of Gratuity Act, 1972, which states that gratuity payable to an employee can be wholly forfeited if the employee's services are terminated for any act constituting an offence involving moral turpitude, provided the offence was committed during employment. The court concluded that both conditions were met in this case: the misconduct (theft) was an offence under the law, and it involved moral turpitude. Therefore, the appellant was justified in forfeiting the gratuity payable to the third respondent.The court also noted the amendment to Section 4(6)(b)(ii) of the Act effective from 1-7-1984, which changed the language from 'shall stand wholly forfeited' to 'may be wholly or partially forfeited.' This amendment implies that the employer must make an independent decision regarding the extent of forfeiture after considering the facts and circumstances of the case and providing notice to the employee.Conclusion:The court allowed the writ appeal, reversing the previous order by the learned Single Judge. It held that theft is indeed an offence involving moral turpitude, and therefore, the gratuity payable to the third respondent stood wholly forfeited under Section 4(6)(b)(ii) of the Act. The court directed the appellant to pay a sum of Rs. 3,000 to the third respondent on compassionate grounds, emphasizing that this payment was not an admission of liability. The case was scheduled for a follow-up in the first week of September 1986 to report the payment.