Case Note & Summary
The petitioner, Chairman/Chief Executive Officer of Sangli District Primary Teachers Co-op. Bank Ltd., challenged the order dated 11.2.2020 passed by the Industrial Court at Sangli in Appeal (PGA) No.3 of 2018, which confirmed the order dated 2.8.2018 of the Controlling Authority under the Payment of Gratuity Act, 1972 directing payment of gratuity of Rs.1,39,042/- with interest at 10% per annum from 21.5.1999 till realization. The respondent, Babasaheb Mahadev Patil, was a Branch Manager at the Ramanandnagar Branch of the petitioner Bank. It was alleged that while in service, the respondent misappropriated Rs.32,97,520/-. An inquiry was conducted, and he was found guilty, leading to termination of services on 21.5.1999. An order under Section 88 of the Maharashtra Co-operative Societies Act was passed requiring the respondent to pay the amount. The petitioner filed a dispute case in the Co-operative Court for recovery. During pendency, the respondent applied for gratuity under Section 4 of the Payment of Gratuity Act. The petitioner declined, contending that the gratuity amount should be adjusted against the misappropriated amount. The Controlling Authority directed payment, and the appeal was dismissed. The legal issue was whether the employer can withhold gratuity on the ground of misappropriation without a finding of moral turpitude or loss during employment. The petitioner argued that the respondent was guilty of misappropriation and the gratuity could be forfeited. The respondent contended that gratuity is a statutory right and cannot be withheld for misconduct not involving moral turpitude. The court analyzed Section 4(6) of the Payment of Gratuity Act, which allows forfeiture only for misconduct involving moral turpitude or loss of property during employment. The court held that the alleged misappropriation did not involve moral turpitude as there was no finding to that effect, and the loss was not during employment but after termination. The court dismissed the petition, upholding the orders of the Controlling Authority and the Industrial Court.
Headnote
A) Payment of Gratuity Act, 1972 - Section 4 - Withholding of Gratuity - Misconduct - The employer cannot withhold gratuity for misconduct not involving moral turpitude or loss of property during employment. The court held that the right to gratuity is a statutory right and can be forfeited only under Section 4(6) of the Act for misconduct involving moral turpitude or loss of property during employment. (Paras 5-7) B) Maharashtra Co-operative Societies Act, 1960 - Section 88 - Adjustment of Dues - The employer cannot adjust gratuity against alleged misappropriation without a final adjudication or finding of moral turpitude. The court held that the gratuity amount is not liable to be adjusted towards the amount allegedly misappropriated by the employee. (Paras 5-7)
Issue of Consideration
Whether the employer can withhold gratuity on the ground that the employee had misappropriated funds, in the absence of a finding of moral turpitude or loss during employment.
Final Decision
The petition is dismissed. The order dated 11.2.2020 passed by the Industrial Court at Sangli in Appeal (PGA) No.3 of 2018 and the order dated 2.8.2018 of the Controlling Authority under the Payment of Gratuity Act, 1972 are upheld. The petitioner is directed to pay the gratuity amount of Rs.1,39,042/- with interest at 10% per annum from 21.5.1999 till realization.
Law Points
- Gratuity is a statutory right
- cannot be withheld for misconduct not involving moral turpitude
- Section 4 of Payment of Gratuity Act
- 1972
- Section 88 of Maharashtra Co-operative Societies Act
- 1960
