Important Point – Natural justice is no unruly horse, no lurking land mine, nor a judicial cure-all.

The writ petition challenges an order passed by the Appellate Authority under Payment of Gratuity Act, 1972 (“Act”) in an appeal under Section 7(7) of the Act.

2. The Petitioner worked as a clerk with UCO Bank (“Bank”), represented by Respondent No.1 herein, for over 31 years. His services were terminated by way of compulsory retirement with effect from 5 October 1996, after finding him guilty of financial irregularities in a disciplinary enquiry held against him. In pursuance of this termination order, the Bank forfeited his gratuity. On his application, the Controlling Authority directed the Bank to pay gratuity in the sum of Rs.1,89,966/- with simple interest at the rate of 10% p.a. This order was reversed by the Appellate Authority on the Bank's appeal. Hence this petition.

3. The Controlling Authority ordered payment of gratuity on the grounds that the Bank had not issued any show cause notice to the Petitioner before forfeiting his gratuity; that the Bank had failed to prove the extent of damage or loss caused to it by the Petitioner; that the Bank did not file any criminal case or civil suit against the Petitioner; and that the Act being a measure for extending social justice to employees, the Bank was, in the facts of the case, not entitled to forfeit the gratuity payable to the Petitioner. The Appellate Authority, on the other hand, found that the Bank had proved its loss to the extent of Rs.8,64,668/- due to the Petitioner's misconduct; that it was immaterial whether or not any criminal case or civil suit was filed by the employer Bank for the forfeiture provision under Section 4(6) to operate; and that the order of the Controlling Authority was not in accordance with Section 7(4) of the Act.

4. Learned Counsel for the Petitioner makes the following submissions :

(a) No opportunity was afforded to the Petitioner to show cause against the proposed forfeiture of his gratuity;

(b) There was no wilful omission or negligence causing any damage or loss to the property belonging to the Bank on the part of the Petitioner;

(c) The alleged acts of the Petitioner constitute, at the worst, a mere irregularity and not an illegality which can be termed as 'misconduct';

(d) In any event, the extent of damage or loss within the meaning of Section 4(6)(i) (b) of the Act is not proved; and

(e) The charge-sheet given to the Petitioner did not speak of any act involving 'moral turpitude' and no penal action was initiated by the Bank on any such count.

5. The petition broadly involves two questions. The first is, whether or not the Bank was bound to issue a separate show-cause notice to the Petitioner in the present case for forfeiture of his gratuity, since there was already an inquiry held into his misconduct (which led to the forfeiture) with notice, and an opportunity was afforded to him to show cause. Secondly, what needs to be considered is whether or not the alleged acts of the Petitioner amount to either (i) wilful omission or negligence causing loss or damage to the Bank to the extent of the gratuity payable to him or (ii) an offence involving moral turpitude. If so, the Bank is certainly entitled to forfeit the Petitioner's gratuity, for there is hardly any doubt that these acts were performed by the Petitioner in the course of his employment.

6. Sub-section (1) of Section 4 of the Act provides for the entitlement of an employee to payment of gratuity as provided thereunder. Section 4(6), which provides for an exception, is as follows:

“4(6) Notwithstanding anything contained in sub-section (1),-

(a) the gratuity of an employee, whose services have been terminated for any act, wilful omission or negligence causing any damage or loss to, or destruction of, property belonging to the employer, shall be forfeited to the extent of the damage or loss so caused.

(b) the gratuity payable to an employee may be wholly or partially forfeited –

(i) if the services of such employee have been terminated for his riotous or disorderly conduct or a