Case Note & Summary
The petitioners, officials of the Bank of Maharashtra, challenged the order of the Appellate Authority under the Payment of Gratuity Act, 1972, which set aside the employer's decision to forfeit the gratuity of respondent No.1, Kishore Shankarrao Khadatkar, a former employee. The respondent No.1 was convicted by a criminal court for an offence under Section 381 of the Indian Penal Code read with Section 34 IPC for theft of bank property. Consequently, the employer forfeited his gratuity under Section 4(6)(b)(ii) of the Payment of Gratuity Act, 1972, on the ground that the employee was convicted for an offence involving moral turpitude. The respondent No.1 challenged the forfeiture before the Controlling Authority, which upheld the forfeiture. However, the Appellate Authority reversed the Controlling Authority's order and directed payment of gratuity, holding that the offence did not involve moral turpitude. The High Court examined the definition of moral turpitude and held that theft by a bank employee, who is in a position of trust, constitutes an offence involving moral turpitude. The court noted that the employee's conviction was for theft of bank property, which is a serious offence and involves moral turpitude. The court further held that the employer's discretion to forfeit gratuity under Section 4(6)(b)(ii) is valid when the employee is convicted for such an offence. The appellate authority's order was found to be perverse as it failed to consider the nature of the offence and the employee's conviction. The High Court quashed the appellate authority's order and restored the employer's decision to forfeit gratuity. The writ petition was allowed, and the rule was made absolute in favor of the petitioners.
Headnote
A) Gratuity - Forfeiture - Moral Turpitude - Section 4(6)(b)(ii) Payment of Gratuity Act, 1972 - Theft by bank employee constitutes an offence involving moral turpitude - The employer's decision to forfeit gratuity under Section 4(6)(b)(ii) is valid when the employee is convicted for an offence involving moral turpitude - The appellate authority's order setting aside forfeiture was perverse and liable to be quashed (Paras 10-20). B) Gratuity - Forfeiture - Employer's Discretion - Section 4(6)(b)(ii) Payment of Gratuity Act, 1972 - The employer has discretion to forfeit gratuity only if the employee is convicted for an offence involving moral turpitude - The court held that the employer's satisfaction must be based on the nature of the offence and the employee's conduct - In this case, the employee's conviction for theft under Section 381 IPC read with Section 34 IPC was for an offence involving moral turpitude (Paras 15-18). C) Gratuity - Forfeiture - Judicial Review - Section 4(6)(b)(ii) Payment of Gratuity Act, 1972 - The appellate authority's order was set aside as it failed to consider the nature of the offence and the employee's conviction - The High Court held that the appellate authority's order was perverse and not based on proper appreciation of evidence (Paras 19-22).
Issue of Consideration
Whether the forfeiture of gratuity of an employee convicted for an offence involving moral turpitude under Section 4(6)(b)(ii) of the Payment of Gratuity Act, 1972 is valid, and whether the appellate authority's order setting aside such forfeiture was perverse.
Final Decision
The High Court allowed the writ petition, quashed the order of the Appellate Authority, and restored the employer's decision to forfeit the gratuity of respondent No.1. Rule made absolute in favor of the petitioners.
Law Points
- Gratuity forfeiture
- moral turpitude
- theft by bank employee
- Payment of Gratuity Act
- 1972 Section 4(6)(b)(ii)
- employer's discretion
- judicial review limited to perversity
