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(2018)2 SCeJ 1341

SUPREME COURT OF INDIA  

Payment of Gratuity Act, 1972 Section 4(5) and (6)  – Forfeiture of gratuity is not automatic on dismissal from service; it is subject to sub-Sections (5) and (6) of Section 4 of The Payment of Gratuity Act, 1972. (2018)2 SC eJournal 1341

 

Payment of Gratuity Act, 1972 Section 4(6)(b)(ii) - Forfeiture of gratuity  - Misconduct – That the requirement of the statute is not the proof of misconduct of acts involving moral turpitude but the acts should constitute an offence involving moral turpitude and such offence should be duly established in a court of law. Held, It is not the conduct of a person involving moral turpitude that is required for forfeiture of gratuity but the conduct or the act should constitute an offence involving moral turpitude -  To be an offence, the act should be made punishable under law -  That is absolutely in the realm of criminal law -  It is not for the Bank to decide whether an offence has been committed - It is for the court -  Apart from the disciplinary proceedings initiated, the Bank has not set the criminal law in motion either by registering an FIR or by filing a criminal complaint so as to establish that the misconduct leading to dismissal is an offence involving moral turpitude - Under sub-Section (6)(b)(ii) of the Act, forfeiture of gratuity is permissible only if the termination of an employee is for any misconduct which constitutes an offence involving moral turpitude, and convicted accordingly by a court of competent jurisdiction -  In the present case, there is no conviction of the respondent for the misconduct which according to the Bank is an offence involving moral turpitude. Hence, there is no justification for the forfeiture of gratuity on the ground that the “misconduct proved against you amounts to acts involving moral turpitude”.         (2018)2 SC eJournal 1341

 

Payment of Gratuity Act, 1972 Section 4 (5) – Sub section (5) has an overriding effect on all other sub-Sections under Section 4 of the Act -  Thus, notwithstanding anything contained under Section 4 of the Act, an employee is entitled to receive better terms of gratuity under any award or agreement or contract with the employer - The subtle distinction between sub-Section (5) and sub- Section (6) is that the former is a non-obstante clause of the entire Section whereas the latter is only in respect of sub-Section (1). (2018)2 SC eJournal 1341

 

Moral turpitude - It is not the conduct of a person involving moral turpitude that is required for forfeiture of gratuity but the conduct or the act should constitute an offence involving moral turpitude -  To be an offence, the act should be made punishable under law -  That is absolutely in the realm of criminal law -  It is not for the employer to decide whether an offence has been committed - It is for the court - Criminal law.(2018)2 SC eJournal 1341

 

Payment of Gratuity Act, 1972 Section 4(6)(a)  and (b) - Sub-Clause (a) and sub-Clause (b) of sub-Section (6) of Section 4 of the Act operate in different fields and in different circumstances. Under sub-Clause (a), the forfeiture is to the extent of damage or loss caused on account of the misconduct of the employee whereas under sub-Clause (b), forfeiture is permissible either wholly or partially in totally different circumstances - Sub-Clause (b) operates either when the termination is on account of- (i) riotous or (ii) disorderly or (iii) any other act of violence on the part of the employee, and under Sub-Clause (ii) of sub-Section (6)(b) when the termination is on account any act which constitutes an offence involving moral turpitude committed during the course of employment. Held, Under sub-Section (6)(a), the gratuity can be forfeited to only to the extent of damage or loss caused to the Bank.  In case, the termination of the employee is for any act or wilful omission or negligence causing any damage or loss to the employer or destruction of property belonging to the employer, the loss can be recovered from the gratuity by way of forfeiture - Whereas under sub-Clause (b) of sub-Section (6), the forfeiture of gratuity, either wholly or partially, is permissible under two situations– (i) in case the termination of an employee is on account of riotous or disorderly conduct or any other act of violence on his part, (ii) if the termination is for any act which constitutes an offence involving moral turpitude and the offence is committed by the employee in the course of his employment. (2018)2 SC eJournal 1341

 

Payment of Gratuity Act, 1972  and Rules - The Act must prevail over the Rules on Payment of Gratuity framed by the employer – Employer cannot take recourse to its own Rules, ignoring the Act, for denying gratuity. Jaswant Singh Gill v. Bharat Coking Coal Limited and others, (2007)1 SCC 663  followed.(2018)2 SC eJournal 1341

 

 ‘Offence’ - Is defined, under The General Clause Act, 1897, to mean “any act or omission made punishable by any law for the time being in force”.  (2018)2 SC eJournal 1341              

 

Facts:

Payment of Gratuity Act, 1972 Section 4(6)  – Misconduct  - Respondent was an employee of the Bank,  against whom disciplinary proceedings were initiated - On the charges being duly established, the respondent was dismissed from service  and order of dismissal has attained finality - Show-cause notice was issued as to why the gratuity should not be forfeited on account of proved misconduct involving moral turpitude - There is a bipartite settlement in the appellant-Bank which provides for forfeiture only if there is a loss caused on account of misconduct leading to dismissal - There is no case for the Bank that the misconduct of the respondent-employee has caused any financial loss to the Bank, and therefore, forfeiture, taking recourse to sub-Section (6) of Section 4 of the Act, cannot be resorted to. 

 

 

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