The Payment of Gratuity Act, 1972, is a beneficial welfare legislation that overrides internal service regulations. Forfeiture of gratuity is strictly limited to the specific conditions prescribed under the Act, requiring either proven financial loss or a criminal conviction for moral turpitude.

ORDER

Per: Justice Pradeep Mittal

This appeal is filed against the order dated 06.10.2025 passed by the learned Single Judge in W.P. No. 21393 of 2021 whereby the petition filed by the writ petitioner was allowed and the Bank was directed to pay gratuity amount to the writ petitioner.

2. The respondent/writ petitioner is widow of late Rajesh Mor, who was dismissed officer of respondent-Bank. She claims gratuity that was payable to her deceased husband. The deceased husband of the petitioner, who was serving as a bank officer, was subjected to departmental proceedings pursuant to a charge sheet dated 30.08.2016 alleging that he failed to open the bank branch on 30.07.2016 despite being In-charge and had committed defalcation of Rs. 1.00 lakh from the branch cash chest on 29.07.2016. Upon both charges being proved in the departmental enquiry, he was dismissed from service vide order dated 30.04.2017, which was affirmed in appeal on 02.11.2017. He subsequently expired on 19.11.2017.

3. Thereafter, the respondent/writ petitioner sought release of gratuity, but the same was rejected by the bank vide order dated 20.01.2018 on the ground that gratuity is not payable in cases of dismissal under Section 4(6)(b) of the Payment of Gratuity Act read with Clause 72(e) of the Bank’s Service Regulations. The respondent/writ petitioner thereafter filed WP No. 7205/2020, pursuant to which the bank reconsidered the matter and passed a fresh order dated 18.08.2021, again rejecting the claim for gratuity on the ground that, being an officer dismissed for misconduct, the deceased employee attracted forfeiture of gratuity under Clause 72(2) of the Service Regulations, and the proviso thereto was held inapplicable. Thereafter, the writ petitioner filed W.P. No. 21393 of 2021, which was allowed as aforesaid. Hence, the present writ appeal has been filed by the Bank, raising the following grounds.

4. It is stated by the learned counsel for appellant-Bank that the appellants have challenged the impugned order primarily on the grounds that the service conditions of the respondent’s husband were governed by the Service Regulations, under which gratuity stood forfeited upon dismissal for misconduct. It is contended that the learned Single Judge erred in applying the provisions of the Payment of Gratuity Act, 1972 instead of Regulation 72 of the Service Regulations and wrongly relied upon an inapplicable judgment. It is further submitted that the learned Single Judge failed to consider the applicability of the decision of the Hon’ble Supreme Court in P. Rajan Sandhi vs. Union of India and incorrectly held that gratuity was payable on the ground that no criminal offence had been committed by the deceased employee. Accordingly, it is urged that the impugned order is erroneous, unsustainable in law, and liable to be set aside.

5. It is also contended by the Bank that that bank has framed its own regulations known as Central Madhya Pradesh Gramin Bank (Officers and Employees) Service Regulations, 2010 and as per Clause- 72 of the Regulations, gratuity stands forfeited as the deceased husband of the writ petitioner was not an ‘employee’ in terms of the Regulations but was 'officer' in terms of the said regulations and therefore, the proviso to Clause 72(2) extinguishes the right of the deceased husband to claim gratuity upon dismissal from service.

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