Introduction:

A batch of employees receives “special advance” for many years from its employer, a State Government Corporation. For a few years, the employees receive it with the Government’s consent, and other years they receive that with the Government’s consent pending. Without the Government’s contribution, the Corporation cannot shoulder the burden, though. So the employees undertake to refund the special advances if the Government does not approve the disbursement. To get the approval, the Corporation tries and fails. In the meanwhile, the employees retire. So the Corporation deducts the special advances from their gratuity.

2. After a few years, the employees challenge the deduction. They contend that the deduction is against the law and cite Section 4 (6) of the Payment of Gratuity Act, 1972 (“the Act”) in support. That provision provides for forfeiture, however. Then, does the Corporation’s enforcing an employee’s undertaking and deducting from his gratuity amount to forfeiture beyond that mentioned in Section 4(6) of the Act?

Facts:

3. All the fifteen petitioners worked as plant workers in the second respondent Corporation: Kerala State Bamboo Corporation Limited. O