Case Note & Summary
The petitioner, Vinod Vinayak Jinturkar, a former employee of the Maharashtra Small Scale Industries Development Corporation (respondent no.2), filed a writ petition challenging an order dated 28.11.2003 regarding recovery of subsistence allowance and seeking payment of leave encashment, provident fund, and gratuity with interest. During the pendency of the petition, the Court allowed withdrawal of leave encashment (Rs.98,400) and directed investment of gratuity (Rs.2,83,842). The respondent no.2 conceded liability for leave encashment but contested gratuity, arguing that the petitioner was found guilty in a departmental enquiry for misappropriation of 3150 metric tonnes of iron and steel under the Warehouse Credit Scheme, causing a loss of Rs.4.85 crores, justifying forfeiture of gratuity. The Court noted that no specific charge was framed against the petitioner regarding a quantified loss, and no finding was recorded that he caused any particular loss. Relying on Section 4(6) of the Payment of Gratuity Act, 1972, the Court held that forfeiture of gratuity requires a specific charge and finding of quantified loss. Since these were absent, the forfeiture was illegal. The Court directed payment of gratuity with interest at 10% per annum from the date of entitlement until payment, and also set aside the recovery of subsistence allowance as it was not properly ordered. The petition was allowed in part.
Headnote
A) Gratuity - Forfeiture - Section 4(6) of Payment of Gratuity Act, 1972 - Requirement of Specific Finding of Quantified Loss - The employer cannot forfeit gratuity unless the departmental enquiry specifically charges the employee with causing a quantified loss and a finding is recorded to that effect - In the absence of such charge and finding, forfeiture is not permissible - Held that the order of forfeiture of gratuity was illegal and the petitioner was entitled to gratuity with interest (Paras 4-6).
Issue of Consideration
Whether the employer can forfeit gratuity of an employee found guilty in a departmental enquiry without a specific charge and finding regarding the quantified loss caused to the employer.
Final Decision
The Court allowed the writ petition in part. The order of forfeiture of gratuity was set aside. The respondent no.2 was directed to pay the gratuity amount of Rs.2,83,842 with interest at 10% per annum from the date of entitlement until payment. The recovery of subsistence allowance was also set aside. The interim order regarding leave encashment was confirmed.
Law Points
- Gratuity forfeiture requires specific charge and finding of quantified loss
- Payment of Gratuity Act 1972 Section 4(6)
- Subsistence allowance recovery without proper order is illegal
Case Details
2010 LawText (BOM) (11) 75
Writ Petition No. 5278 of 2005
V.C. Daga, A.B. Chaudhari
Mr. Anand Parchure for Petitioner, Mr. A.M. Deshpande for Respondent 1, Mr. B. Lahiri for Respondent 2, Ms. Tanna h/f Mr. Sundaram for Respondent 3
Vinod s/o Vinayak Jinturkar
State of Maharashtra, The Managing Director, Maharashtra Small Scale Industries Development Corpn., The Regional Provident Fund Commissioner
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Nature of Litigation
Writ petition challenging recovery of subsistence allowance and seeking payment of leave encashment, provident fund, and gratuity.
Remedy Sought
Petitioner sought quashing of order dated 28.11.2003 regarding recovery of subsistence allowance and direction for payment of leave encashment, provident fund, and gratuity with interest.
Filing Reason
Petitioner was denied gratuity and other benefits after being found guilty in a departmental enquiry for misappropriation, and subsistence allowance was recovered.
Previous Decisions
Interim order dated 11.12.2006 allowed withdrawal of leave encashment (Rs.98,400) and directed investment of gratuity (Rs.2,83,842).
Issues
Whether the employer can forfeit gratuity under Section 4(6) of the Payment of Gratuity Act, 1972 without a specific charge and finding of quantified loss in the departmental enquiry.
Submissions/Arguments
Petitioner argued that he was entitled to gratuity and other benefits, and the recovery of subsistence allowance was illegal.
Respondent no.2 argued that the petitioner was found guilty in a departmental enquiry for misappropriation causing loss of Rs.4.85 crores, justifying forfeiture of gratuity.
Ratio Decidendi
Forfeiture of gratuity under Section 4(6) of the Payment of Gratuity Act, 1972 requires a specific charge in the departmental enquiry regarding the quantified loss caused by the employee and a finding to that effect. In the absence of such charge and finding, forfeiture is illegal.
Judgment Excerpts
It is not in dispute that in the said Departmental Enquiry no specific charge was framed against the petitioner that he had caused a particular quantified loss to the Corporation and therefore he was liable to make payment of the amounts towards the loss caused to the Corporation.
Consequently, there is no finding recorded against the petitioner that he had caused any particular loss to the Corporation by his act of omission.
Procedural History
The petitioner filed Writ Petition No. 5278 of 2005 challenging the order dated 28.11.2003. On 11.12.2006, the Court passed an interim order allowing withdrawal of leave encashment and directing investment of gratuity. The petition was finally heard and decided on 29.11.2010.
Acts & Sections
- Payment of Gratuity Act, 1972: Section 4(6)
