2020 (1) TMI 1671 - HC - Indian Laws

Employer cannot forfeit gratuity based on departmental enquiry findings under Section 4(6)(b)(ii) Payment of Gratuity Act

Western Coal Fields Limited, Versus The Presiding Officer, Appellate Authority under the Payment of Gratuity Act, 1972 & Dy. Chief Labour Commissioner (C), Nagpur.

The Bombay HC dismissed a writ petition challenging forfeiture of gratuity under Section 4(6)(b)(ii) of the Payment of Gratuity Act, 1972. The ... Forfeiture of Gratuity - Moral turpitude - whether such an act, which was proved in a departmental enquiry by the petitioner would constitute an offence involving moral turpitude, justifying forfeiture of gratuity under Section 4(6)(b)(ii) of the Payment of Gratuity Act, 1972? - HELD THAT:- The standing orders obviously cannot be referred to find the definition of the expression “offence”. In the Code of Criminal Procedure, 1973, “offence” means any act or omission punishable by any law for the time being in force. The question is whether the findings rendered in departmental enquiry conducted by the petitioner (employer) would be enough to conclude that the act of the respondent No. 2, which stood proved and led to the termination of his service, constitutes an “offence” involving moral turpitude. The answer has to be in the negative, because whether an act constitutes an offence can be decided only by a Competent Court. This is because, whether the material on record and acts attributed to a person indicate the ingredients of an offence would have to be judged on the basis of proceedings under criminal jurisprudence. The further question as to whether such an offence involves moral turpitude could perhaps be in the domain of a proceeding other than that under criminal jurisprudence, but what would constitute an offence, could certainly not be within the purview of departmental enquiry or any such enquiry by an employer. A perusal of the judgment of the Hon’ble Supreme Court in the case of Union Bank of India and Others Vs. C.G. Ajay Babu and another [2018 (8) TMI 934 - SUPREME COURT] shows that in the opening paragraph the question framed for consideration was, whether forfeiture of gratuity under the Payment of Gratuity Act, 1972, is automatic on dismissal from service. In the process of deciding this specific question and upon hearing the counsel, the Hon’ble Supreme Court examined whether Section 4(6)(b)(ii) of the said Act would apply in the case before it and then laid down the law as quoted above - Hence, it becomes very clear that the Hon’ble Supreme Court did lay down its opinion regarding Section 4(6) (b)(ii) of the said Act, while deciding the specific question framed in the facts and circumstances of that case. Therefore, the said opinion of the Hon’ble Supreme Court is binding on this Court. There is no substance in the present writ petition and accordingly, it is dismissed. Issues Involved:1. Entitlement to gratuity under the Payment of Gratuity Act, 1972.2. Forfeiture of gratuity under Section 4(6)(b)(ii) of the Payment of Gratuity Act, 1972.3. Distinction between 'misconduct' and 'offence' involving moral turpitude.Issue-wise Detailed Analysis:1. Entitlement to Gratuity under the Payment of Gratuity Act, 1972:The petitioner, Western Coal Fields Limited, disputed the respondent's entitlement to gratuity. The Controlling Authority and Appellate Authority under the Payment of Gratuity Act, 1972, held that the respondent was entitled to gratuity based on 22 years, 6 months, and 8 days of service. The authorities rejected the petitioner's contention that they could forfeit the gratuity under Section 4(6)(b)(ii) of the Act.2. Forfeiture of Gratuity under Section 4(6)(b)(ii) of the Payment of Gratuity Act, 1972:The petitioner argued that the respondent's gratuity should be forfeited because he was dismissed for providing false information about his date of birth, which constituted an offence involving moral turpitude. The authorities below held that while the respondent's act was misconduct, it did not constitute an offence involving moral turpitude as required under Section 4(6)(b)(ii) of the Act. The petitioner relied on the Supreme Court judgment in Devendra Kumar Vs. State of Uttaranchal, arguing that suppression of information for employment was an act of moral turpitude. However, the authorities and the High Court found that for forfeiture under Section 4(6)(b)(ii), a criminal offence and conviction were necessary.3. Distinction between 'Misconduct' and 'Offence' Involving Moral Turpitude:The authorities distinguished between misconduct and an offence involving moral turpitude. The Appellate Authority noted that misconduct, as defined under the standing orders, is distinct from an offence, which must be punishable under law. The High Court emphasized that only a Competent Court could determine if an act constituted an offence involving moral turpitude. The Supreme Court's judgment in Union Bank of India and Others Vs. C.G. Ajay Babu was cited, stating that forfeiture of gratuity requires a criminal conviction for an offence involving moral turpitude, not just proof of misconduct in a departmental enquiry.Conclusion:The High Court upheld the orders of the Controlling and Appellate Authorities, stating that the petitioner's contention lacked merit. The Court reiterated that for forfeiture of gratuity under Section 4(6)(b)(ii) of the Payment of Gratuity Act, 1972, a criminal conviction for an offence involving moral turpitude is necessary. The writ petition was dismissed, and the rule was discharged.