Case Note & Summary
The petitioner, Murari Kawadu Kumbhre, a pensioner, retired on 30.6.2008 from the Maharashtra State Cooperative Tribal Development Corporation Ltd. He was paid Rs.2,78,011/- out of the total gratuity amount, but the respondents withheld Rs.2,01,988/- pending decision of an appeal before the Sales Tax authority. The respondents alleged that the petitioner, along with the Accountant, was responsible for non-filing of Sales Tax Returns for the years 1995-1997, leading to imposition of penalty by the Sales Tax Department. An appeal against the penalty order was pending before the Commissioner of Sales Tax, Amravati. The petitioner challenged the order dated 30.10.2009 issued by respondent no.3 withholding the gratuity amount. The court noted that no show cause notice or enquiry was conducted against the petitioner during his service period for the alleged non-filing of returns. There was no record to show that the respondents never filed any Sales Tax Return till 2008; in fact, subsequent years' returns were filed when the petitioner was in service. The court held that the action of the respondents was unsustainable for want of specific provision under the Payment of Gratuity Act, 1972 and for breach of principles of natural justice. The respondents' reliance on Section 4(1)(a) of the Gratuity Act to forfeit the amount was misplaced as the alleged negligence did not fall within that provision. The court also rejected the respondents' submission that the amount would be returned after the appeal was over, stating that retention of the amount itself was without jurisdiction. The writ petition was allowed, and the impugned order was quashed and set aside. The respondents were directed to pay the withheld amount of Rs.2,01,988/- to the petitioner within four weeks, failing which interest at 12% per annum would be payable.
Headnote
A) Gratuity - Withholding of Gratuity - Lack of Jurisdiction - Withholding of gratuity without specific provision under Payment of Gratuity Act, 1972 and without opportunity of hearing is unsustainable - The respondents withheld part of gratuity due to alleged non-filing of sales tax returns by the petitioner, but no show cause notice or enquiry was conducted during service - Held that such action is without jurisdiction and violates principles of natural justice (Paras 1-5). B) Gratuity - Forfeiture of Gratuity - Section 4(1)(a) of Payment of Gratuity Act, 1972 - Negligence not covered - The respondents sought to forfeit gratuity under Section 4(1)(a) for alleged negligence in filing returns - The court held that the alleged negligence does not fall within the ambit of Section 4(1)(a) and cannot be a ground to invoke undisclosed power of recovery (Paras 3-4).
Issue of Consideration
Whether the respondents could withhold the gratuity amount of the petitioner without any opportunity of hearing and without any specific provision under the Payment of Gratuity Act, 1972.
Final Decision
Writ petition allowed. Impugned order dated 30.10.2009 quashed and set aside. Respondents directed to pay the withheld amount of Rs.2,01,988/- to the petitioner within four weeks, failing which interest at 12% per annum from the date of order till payment.
Law Points
- Gratuity cannot be withheld without specific provision under Payment of Gratuity Act
- 1972
- Principles of natural justice require opportunity of hearing before withholding gratuity
- Section 4(1)(a) of Payment of Gratuity Act
- 1972 does not cover negligence in filing tax returns
