2023 (9) TMI 1332 - HC - Indian Laws

Court rules in favor of petitioner in gratuity case under Section 4(6) of Gratuity Act, emphasizing termination requirement

Surendra Prasad Versus Union of India & Ors.

The court ruled in favor of the petitioner, Surendra Prasad, in a case involving the application of Section 4(6) of the Payment of Gratuity Act, 1972. The ... Direction to respondents to pay his due gratuity along with interest - Offence involving moral turpitude - It is the contention of the petitioner that the Deputy Chief Labour Commissioner failed to appreciate the scope of Section 4(6) of the Payment of Gratuity Act, 1972 and that payment of gratuity is not a gesture of charity, rather is a recognized statutory right to be provided in favour of the employee - HELD THAT:- Section 4(6) of the Payment of Gratuity Act, 1972 specifically states ‘termination’ as a pre-requisite condition for forfeiture of gratuity in all cases, including the present allegation of “offence involving moral turpitude”. The Supreme Court in Jorsingh Govind Vanjari Vs. Divisional Controller, Maharashtra State Road Transport Corporation, Jalgaon Division, Jalgaon, [2016 (12) TMI 1905 - SUPREME COURT] stated that termination of service was an essential pre-requisite for denial of gratuity. The co-ordinate bench of this High Court in Steel Authority of India Ltd. & Anr. Vs. Taraknath Sengupta & Ors.,[2009 (4) TMI 1057 - CALCUTTA HIGH COURT], affirmed the right of an employee to receive payment of gratuity and postulated the need for ‘termination’ as a requisite for invoking Section 4(6) of the Payment of Gratuity Act, 1972. Payment of gratuity is not charity, rather is a statutory right recognized by the Payment of Gratuity Act, 1972 - Section 4(6) of the Payment of Gratuity Act, 1972 stipulates specific conditions where the employer may forfeit gratuity. Through the aforementioned judgements, specifically, Jorsingh Govind Vanjari Vs. Divisional Controller, Maharashtra State Road Transport Corporation, Jalgaon Division, Jalgaon, alleged misconduct of the employee as per the report of the domestic inquiry is not enough to constitute an “offence involving moral turpitude”, rather termination of services on account of the alleged misconduct, which constitutes an offence involving moral turpitude is essential for forfeiture of payment of gratuity. Petition allowed. Issues Involved:1. Whether the petitioner's circumstances attract the application of Section 4(6) of the Payment of Gratuity Act, 1972.2. Whether the petitioner is entitled to gratuity despite pending criminal and CBI cases.Summary:Issue 1: Application of Section 4(6) of the Payment of Gratuity Act, 1972The petitioner, Surendra Prasad, sought a writ of mandamus to set aside the Deputy Chief Labour Commissioner's order dated March 16, 2018, which denied his gratuity based on pending criminal and CBI cases, and to affirm the Assistant Labour Commissioner's order dated May 18, 2017, directing payment of gratuity. The Deputy Chief Labour Commissioner had deemed the petitioner's case as one involving 'offence involving moral turpitude' under Section 4(6)(b)(ii) of the Payment of Gratuity Act, 1972, due to pending cases. However, the court emphasized that Section 4(6) specifically requires 'termination' for forfeiture of gratuity. The petitioner was never terminated but was demoted with a penalty of token recovery from retiral dues, which does not satisfy the termination requirement under Section 4(6).Issue 2: Entitlement to Gratuity Despite Pending CasesThe Deputy Chief Labour Commissioner's order was based on the possibility of the petitioner being found guilty in pending cases. However, the court highlighted that forfeiture of gratuity requires termination for an offence involving moral turpitude, which must be established in a court of law. The petitioner had been acquitted in one case and other cases were still pending. The Supreme Court rulings in Jorsingh Govind Vanjari Vs. Divisional Controller and Union Bank of India & Ors. Vs. C.G. Ajay Babu & Anr. affirmed that mere allegations or pending cases do not justify forfeiture of gratuity without termination and conviction for an offence involving moral turpitude.Order and DirectionsThe court issued a writ of mandamus, setting aside the Deputy Chief Labour Commissioner's order and affirming the Assistant Labour Commissioner's order. The respondents were directed to pay the petitioner gratuity along with interest at 8% from one month after his superannuation within four weeks. The writ petition was allowed with no order as to costs.