Case Note & Summary
The dispute arose under the Payment of Gratuity Act, 1972, where an employee of Air India Ltd., who had served for 29 years, was dismissed from service on 26 June 2013 after being found guilty in a departmental enquiry of furnishing false age documents at the time of his appointment in 1983. The dismissal order also directed forfeiture of his gratuity. The employee challenged the forfeiture before the Controlling Authority under the Act by filing an application on 23 May 2014, claiming an amount of Rs. 4,72,845/-. The Controlling Authority, by order dated 11 January 2019, allowed the application, holding that the employee was entitled to gratuity plus interest at 10% per annum from the date of dismissal. Air India appealed to the Appellate Authority, which dismissed the appeal on 29 April 2021, confirming the Controlling Authority's order. Aggrieved, Air India filed a writ petition before the Bombay High Court. The core legal issue was whether the forfeiture of gratuity could be sustained on the ground that the employee had obtained employment by fraudulent means, i.e., by misrepresenting his age, which was not listed as a ground for forfeiture under Section 4(6) of the Payment of Gratuity Act, 1972. Air India contended that an appointment obtained by fraud is void ab initio and no benefits, including gratuity, should flow from it, relying on the Supreme Court decision in R. Vishwanatha Pillai vs. State of Kerala. The employee argued that the forfeiture could only be ordered on the specific grounds enumerated in Section 4(6), namely, damage or loss to property, riotous or disorderly conduct, or an offence involving moral turpitude committed in the course of employment. The High Court, after examining Section 4(6), held that the grounds for forfeiture are exhaustive and strictly limited. The provision does not include obtaining employment through false documents. The Court emphasized that to read such a ground into the provision would be to rewrite the statute. It distinguished the case of R. Vishwanatha Pillai as not applicable to gratuity forfeiture under this Act. The Court also noted that the employee had rendered long service and the employer could have taken timely action. Reliance was placed on Union Bank of India vs. C.G. Ajay Babu, which held that forfeiture under Section 4(6) is permissible only in accordance with its plain terms. Accordingly, the High Court dismissed the writ petition, upholding the orders of the authorities below and directing that the employee is entitled to the gratuity amount with interest as ordered.
Headnote
A) Labour Law - Gratuity - Forfeiture of Gratuity - Payment of Gratuity Act, 1972, Section 4(6) - Employee dismissed after 29 years of service for allegedly furnishing false age documents at time of employment; gratuity forfeited by employer - Court held that forfeiture under Section 4(6) is permissible only on grounds specified in clauses (a) and (b): (a) termination for act/wilful omission/negligence causing damage/loss/destruction of employer's property, or (b) termination for riotous/disorderly conduct or any other act of violence, or for an act constituting an offence involving moral turpitude committed during employment. Illegal appointment by false documents does not fall within any of these grounds. The provision is exhaustive and cannot be expanded by implication. Hence, forfeiture was unjustified - Held that the employee is entitled to gratuity for continuous service from 24.11.1983 to 04.07.2013 along with interest; writ petition dismissed (Paras 8-13).
Issue of Consideration
Whether the forfeiture of gratuity of an employee dismissed for obtaining employment by furnishing false age documents is permissible under Section 4(6) of the Payment of Gratuity Act, 1972?
Final Decision
The writ petition was dismissed. The Court upheld the orders of the Controlling Authority and Appellate Authority, holding that forfeiture of gratuity under Section 4(6) of the Payment of Gratuity Act, 1972 is only permissible on the specific grounds enumerated, and obtaining employment by false documents is not one of them. The respondent is entitled to gratuity of Rs. 4,72,845/- with 10% interest per annum from 04.07.2013 till payment.
Law Points
- Gratuity forfeiture under Section 4(6) of Payment of Gratuity Act
- 1972 is exhaustive and limited to grounds specified
- illegal appointment by false documents not a ground for forfeiture
- forfeiture is not automatic on dismissal
- interpretation of 'damage or loss'
- 'riotous or disorderly conduct'
- 'offence involving moral turpitude' must be strict
- employer's vigilance required at time of appointment
