Case Note & Summary
The case involves a writ petition filed by the Chairman cum Managing Director of Western Coalfields Ltd. challenging the entitlement of respondent No.1, Pramod Gulabchand Baid, to receive gratuity after being dismissed from service following a departmental enquiry. The petitioner argued that a dismissed employee is not entitled to gratuity under Section 4(1) of the Payment of Gratuity Act, 1972, as the provision covers only superannuation, retirement, resignation, death, or disablement. They relied on the Supreme Court judgment in Y.P. Sarabhai v. Union Bank of India and other cases. The respondent contended that dismissal amounts to 'retirement' under Section 2(q) of the Act, and since no order for forfeiture of gratuity was passed under Section 4(6), he was entitled to the amount. The court, after rehearing the parties, held that the definition of 'retirement' in Section 2(q) includes termination of service by the employer, and thus a dismissed employee is covered under Section 4(1)(b). The court further noted that forfeiture of gratuity under Section 4(6) requires a specific order based on damage, loss, or riotous behavior, which was absent in this case. Consequently, the court dismissed the petition and upheld the respondent's entitlement to gratuity.
Headnote
A) Gratuity - Entitlement of Dismissed Employee - Dismissal as 'Retirement' - Payment of Gratuity Act, 1972, Sections 2(q), 4(1)(b) - The court considered whether dismissal from service constitutes 'retirement' under Section 2(q) of the Act, thereby entitling the employee to gratuity under Section 4(1)(b). The court held that the definition of 'retirement' in Section 2(q) includes termination of service by the employer, and thus a dismissed employee is entitled to gratuity unless forfeited under Section 4(6). (Paras 1-3)
B) Gratuity - Forfeiture - Requirement of Specific Order - Payment of Gratuity Act, 1972, Section 4(6) - The court examined the condition for forfeiture of gratuity under Section 4(6), which requires an order for forfeiture based on damage, loss, or riotous behavior. Since no such order was passed against the respondent, the court held that gratuity cannot be denied. (Para 3)
Issue of Consideration
Whether a dismissed employee is entitled to receive gratuity under the Payment of Gratuity Act, 1972, despite dismissal from service after a departmental enquiry.
Final Decision
The court dismissed the writ petition, holding that the dismissed employee is entitled to gratuity under the Payment of Gratuity Act, 1972, as dismissal constitutes 'retirement' under Section 2(q) and no forfeiture order under Section 4(6) was passed.
Law Points
- Dismissal from service amounts to 'retirement' under Section 2(q) of the Payment of Gratuity Act
- 1972
- entitling employee to gratuity under Section 4(1)(b)
- Forfeiture of gratuity under Section 4(6) requires a specific order based on damage
- loss
- or riotous behavior
- Absence of such order
- gratuity cannot be denied.
Case Details
2015 LawText (BOM) (12) 105
Writ Petition No.98 of 2012
Shri A. M. Gordey, Senior Advocate with Shri Tushar Darda, Advocate for the petitioner; Shri M. M. Sudame, Advocate for the respondent No.1
Chairman Cum Managing Director, Western Coalfields Ltd., Coal Estate, Civil Lines Nagpur
Shri Pramod Gulabchand Baid and Others
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Nature of Litigation
Writ petition challenging the entitlement of a dismissed employee to receive gratuity under the Payment of Gratuity Act, 1972.
Remedy Sought
Petitioner sought a declaration that respondent No.1, a dismissed employee, is not entitled to receive gratuity.
Filing Reason
Petitioner challenged the entitlement of respondent No.1 to gratuity after dismissal from service following a departmental enquiry.
Issues
Whether dismissal from service amounts to 'retirement' under Section 2(q) of the Payment of Gratuity Act, 1972, entitling the employee to gratuity under Section 4(1)(b).
Whether gratuity can be forfeited without a specific order under Section 4(6) of the Act.
Submissions/Arguments
Petitioner argued that a dismissed employee is not entitled to gratuity under Section 4(1) as it covers only superannuation, retirement, resignation, death, or disablement; relied on Y.P. Sarabhai v. Union Bank of India and other cases.
Respondent argued that dismissal amounts to 'retirement' under Section 2(q) and since no forfeiture order under Section 4(6) was passed, he is entitled to gratuity.
Ratio Decidendi
The definition of 'retirement' in Section 2(q) of the Payment of Gratuity Act, 1972 includes termination of service by the employer, and thus a dismissed employee is entitled to gratuity under Section 4(1)(b). Forfeiture of gratuity under Section 4(6) requires a specific order based on damage, loss, or riotous behavior; in the absence of such an order, gratuity cannot be denied.
Judgment Excerpts
By following the procedure analogous to provisions of Order 47 Rule 8 of the Order of Civil Procedure Code 1908, the learned Counsel for the parties have been reheard on the question as regards entitlement of respondent No.1 to receive amount of gratuity despite the fact that he has been dismissed from service after holding departmental enquiry.
Reference was made to the provisions of Section 4(1) of the said Act to urge that as respondent No.1 had been dismissed from service, he would not be covered by provisions of Section 4(1)(a) to (c).
He referred to provisions of Section 2(q) of the said Act and urged that dismissal of an employee would amount to 'retirement' for the purposes of said Act and, therefore, under provisions of Section 4(1)(b) of the said Act, the respondent No.1 was entitled to receive gratuity.
Procedural History
The matter was initially heard and then reheard following a procedure analogous to Order 47 Rule 8 CPC. Submissions were heard on 14-12-2015 and order pronounced on 23-12-2015.
Acts & Sections
- Payment of Gratuity Act, 1972: Section 2(q), Section 4(1), Section 4(1)(a), Section 4(1)(b), Section 4(1)(c), Section 4(6)
- Code of Civil Procedure, 1908: Order 47 Rule 8
