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2025 Supreme(Online)(Kar) 21481
KARNATAKA HIGH COURT
ANU SIVARAMAN, RAJESH RAI K, JJ
SHRI S.N. SHANKAR – Appellant
Versus
THE CHAIRMAN AND MANAGING DIRECTOR INDIAN BANK – Respondent
WRIT APPEAL NO.399 OF 2023 (L-PG)
For the Appellants/Petitioners: S. Vittal Shetty
For the Respondents: Udaya Shankar Rai P
Forfeiture of gratuity permissible based on disciplinary findings of moral turpitude, even if a criminal conviction is still pending appeal.
Headnote:(A) Payment of Gratuity Act, 1972 - Sections 4(1) and 4(6)(b)(ii) - Forfeiture of gratuity when an employee is terminated for misconduct involving moral turpitude - The court held that forfeiture is valid even if conviction is pending appeal as long as misconduct is established in a disciplinary proceeding. (Paras 7, 9, 10, 11, 12)
(B) The court emphasized that the interpretation in C.G. Ajay Babu regarding the need for a criminal conviction for forfeiture is an obiter dictum and not a statutory requirement. (Paras 8, 9)
Facts of the case:
The appellant’s gratuity was forfeited on grounds of moral turpitude. The appellant claimed no loss occurred to the bank and the conviction was pending.
Findings of Court:
The court upheld the findings of moral turpitude and confirmed forfeiture despite the appeal, citing the established misconduct in disciplinary proceedings.
Issues: The primary issues were the applicability of termination provisions under the Gratuity Act and whether a pending criminal appeal affects gratuity forfeiture.
Ratio Decidendi: It was determined that disciplinary findings alone can justify forfeiture irrespective of pending criminal outcomes. The court reaffirmed that established misconduct is sufficient for forfeiture.
Result: Appeal dismissed.
| Table of Content |
|---|
| 1. employee appeals against gratuity forfeiture based on misconduct. (Para 1) |
| 2. employee argues lack of conviction, disputing misconduct findings. (Para 3 , 4) |
| 3. court reviews criteria for gratuity forfeiture amid pending criminal matters. (Para 5 , 6 , 8 , 9) |
| 4. court underscores disciplinary findings as sufficient for forfeiture. (Para 10 , 11) |
| 5. court dismisses appeal, confirming misconduct justifies gratuity forfeiture. (Para 12) |
(PER: HON'BLE MRS. JUSTICE ANU SIVARAMAN)
This writ appeal is preferred by the dismissed employee challenging the Order dated 07.02.2023, passed by the learned Single Judge in Writ Petition No.19046/2015, allowing the Writ Petition filed by the Employer - Bank against an order passed in the Gratuity Appeal by the Appellate Authority under the Payment of Gratuity Act, 1972 ('Gratuity Act' for short). The order dated 13.02.2015 passed in the Gratuity Appeal was set aside and the order of forfeiture of gratuity made by the employer was confirmed.
2. We have heard Shri. S. Vittal Shetty, learned counsel appearing for the appellant and Shri. Udaya Shankar Rai. P, learned counsel appearing for the respondent.
3. The learned counsel appearing for the appellant submits that there was no financial loss caused to the Bank on account of the alleged misconduct committed by the appellant and that the conviction against him is still pending in appeal before this Court. It is submitted that in the absence of the conviction being confirmed, the learned Single Judge was not justified in having found that the appellant was guilty of grave misconduct for an offence involving moral turpitude.
4. It is contended that the Apex Court inJorsingh Govind Vanjari v. Divisional Controller, Maharashtra State Road Transport Corporation , Jalgaon Division, Jalgaon reported in(2017) 2 SCC 12 and Union Bank of India v. C.G. Ajay Babu reported in(2018) 9 SCC 529 , has held that forfeiture of Gratuity under Section 4 (6)(b)(ii) of the Gratitude Act is possible only if there is a conviction by a Criminal Court for an offence which involves moral turpitude.
5. The learned counsel appearing for the respondent, on the other hand, submits that the appellant's services had been terminated for the commission of an offence involving moral turpitude and that the charges of fraudulent acts were found proved in the disciplinary enquiry. It is submitted that in respect of the very same charges, criminal prosecution was launched against the appellant under the provisions of Section 120B of the Indian Penal Code, 1860 read with Section 13(1)(b) and 13(2) of the Prevention of Corruption Act, 1988 and that the appellant had been convicted to undergo rigorous imprisonment with fine. It is contended that the said conviction in the special case has not been set aside by any Court and that the finding in the Disciplinary Enquiry is concluded as against the petitioner, even if he is acquitted in appeal in the criminal case.
6. The learned counsel would also place reliance on the decision of the Apex Court in Western Coal Fields Limited v. Manohar Govinda Fulzele reported in 2025 INSC 233, to contend that the judgment in C.G. Ajay Babu's case (supra) which is relied on by the learned counsel for the appellant has been held to be obiter dicta and the Bench has held that where an offence involving moral turpitude is proved even in disciplinary proceedings, forfeiture of gratuity is permissible.
7. We have considered the contentions advanced.
Section 4 (1)(a) to(c) and (6)(b)(i) and (ii) of the Gratuity Act reads as follows:-
"4. Payment of gratuity.- (1) Gratuity shall be payable to an employee on the termination of his employment after he has rendered continuous service for not less than five years,-
(a) on his superannuation, or (b) on his retirement or resignation, or (c) on his death or disablement due to accident or disease: x x x x x (6) Notwithstanding anything contained in sub-section (1),- (a) the gratuity of an employee, whose services have
