Gratuity forfeiture for moral turpitude requires final criminal determination; FIR or charge sheet alone is not enough.

The Delhi HC addressed forfeiture of gratuity under the Payment of Gratuity Act and held that Section 4(6)(b)(ii) applies only where the employee's act is finally determined to constitute an offence involving moral turpitude committed in the course of employment. It distinguished Section 4(6)(a), which permits only proportionate forfeiture to the extent of loss caused by wilful misconduct or negligence, and Section 4(6)(b)(i), which concerns riotous, disorderly, or violent conduct. Mere registration of an FIR or filing of a charge sheet was insufficient to establish the statutory precondition for full forfeiture. The forfeiture of the entire gratuity was therefore premature and unsustainable, and release of gratuity was directed.

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Issues: Whether forfeiture of the employee's entire gratuity under Section 4(6)(b)(ii) of the Payment of Gratuity Act, 1972 was sustainable before a competent criminal court had finally determined that the alleged acts constituted an offence involving moral turpitude.

Analysis: Section 4(6)(a) applies where termination is for an act, wilful omission, or negligence causing damage or loss, and forfeiture is confined to the extent of such loss. Section 4(6)(b)(i) concerns riotous, disorderly, or violent conduct. Section 4(6)(b)(ii) operates only where the termination is for an act constituting an offence involving moral turpitude committed in the course of employment. The expression requires certainty that the act amounts to such an offence, and that determination lies within the criminal law domain. Mere registration of an FIR or filing of a charge sheet does not amount to a final judicial determination. In the absence of such final determination, the employer could not conclude that the statutory condition for forfeiture under Section 4(6)(b)(ii) was satisfied.

Conclusion: The forfeiture of the entire gratuity was premature and unsustainable; the action was set aside and the gratuity was directed to be released.

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