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 employee terminated for theft during employment can be wholly forfeited under Section 4(6)(b)(ii) of the Payment of Gratuity Act, 1972. The court emphasized the employer's discretion in deciding the extent of forfeiture post the 1984 amendment. The writ appeal was allowed, directing the appellant to pay a sum to the employee on compassionate grounds, without admission of liability.

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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.

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