Case Note & Summary
The petitioner, The Jalgaon District Central Co-operative Bank Limited, challenged an order dated 09.10.2024 passed by the Appellate Authority/Industrial Court, Jalgaon, which upheld the judgment and order dated 18.09.2023 of the Controlling Authority under the Payment of Gratuity Act, 1972. The Controlling Authority had directed the petitioner to pay gratuity along with interest to the respondent, Dinesh S/o Mohanlal Chandankar, a former employee whose services were terminated on 28.06.2019 after a departmental inquiry. The termination order also forfeited his right to receive gratuity. The respondent was charged with unauthorized disbursement of loans during his employment, allegedly causing loss to the bank. The respondent separately challenged his termination before the Labour Court under the MRTU and PULP Act, 1971, and also filed an application under the Payment of Gratuity Act, 1972, challenging the forfeiture of gratuity. The Controlling Authority, after hearing both parties, directed the bank to release gratuity with interest. The bank's appeal to the Industrial Court was dismissed. The High Court, in this writ petition, examined the validity of the forfeiture under Section 4(6) of the Payment of Gratuity Act, 1972. The court noted that forfeiture of gratuity is permissible only if the employee's misconduct caused loss of property or involved moral turpitude. The court found that the unauthorized loan disbursement, without proof of actual loss or moral turpitude, did not meet the threshold for forfeiture. Consequently, the High Court dismissed the petition, upholding the orders of the lower authorities and directing the bank to pay gratuity with interest.
Headnote
A) Gratuity - Forfeiture - Section 4(6) Payment of Gratuity Act, 1972 - Forfeiture of gratuity is permissible only if the employee's misconduct caused loss of property or involved moral turpitude - The court held that unauthorized loan disbursement without proof of loss or moral turpitude does not justify forfeiture (Paras 1-4)
Issue of Consideration
Whether the forfeiture of gratuity of an employee terminated for unauthorized loan disbursement is valid under Section 4(6) of the Payment of Gratuity Act, 1972
Final Decision
Writ petition dismissed; orders of Controlling Authority and Appellate Authority upheld; petitioner directed to pay gratuity with interest from date of termination
Law Points
- Gratuity forfeiture requires loss of property or moral turpitude
- mere unauthorized loan disbursement not sufficient
- Section 4(6) Payment of Gratuity Act
- 1972
Case Details
2026 LawText (BOM) (07) 150
Writ Petition No. 2138 of 2025
Mr. V. D. Salunke for Petitioner, Mr. Shrikant S. Patil for Respondent
The Jalgaon District Central Co-operative Bank Limited
Shri Dinesh S/o Mohanlal Chandankar
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Nature of Litigation
Writ petition challenging orders directing payment of gratuity with interest to a terminated employee
Remedy Sought
Petitioner bank sought to quash the orders of the Controlling Authority and Appellate Authority directing payment of gratuity
Filing Reason
Petitioner bank aggrieved by the direction to pay gratuity despite forfeiture order due to misconduct
Previous Decisions
Controlling Authority under Payment of Gratuity Act, 1972 directed payment of gratuity with interest; Appellate Authority/Industrial Court dismissed appeal
Issues
Whether forfeiture of gratuity under Section 4(6) of Payment of Gratuity Act, 1972 is valid when employee is terminated for unauthorized loan disbursement without proof of loss or moral turpitude
Submissions/Arguments
Petitioner argued that respondent's misconduct of unauthorized loan disbursement caused loss to the bank, justifying forfeiture of gratuity
Respondent contended that forfeiture was not justified as there was no loss of property or moral turpitude
Ratio Decidendi
Forfeiture of gratuity under Section 4(6) of Payment of Gratuity Act, 1972 is permissible only if the employee's misconduct caused loss of property or involved moral turpitude; unauthorized loan disbursement without such proof does not justify forfeiture
Judgment Excerpts
The petitioner impugns order dated 09.10.2024 passed by Appellate Authority / Member, Industrial Court, Jalgaon in Appeal (PGA) No. 05 of 2024, thereby upholding judgment and order dated 18.09.2023 passed by Controlling Authority under the Payment of Gratuity Act, 1972 and Labour Judge, Jalgaon, whereby petitioner has been directed to pay amount of gratuity along with interest from date of termination of service.
Procedural History
Respondent's services terminated on 28.06.2019 with forfeiture of gratuity; respondent filed application under Payment of Gratuity Act, 1972; Controlling Authority directed payment of gratuity with interest on 18.09.2023; petitioner appealed to Industrial Court which dismissed appeal on 09.10.2024; petitioner filed writ petition in High Court which was dismissed on 07.07.2026
Acts & Sections
- Payment of Gratuity Act, 1972: Section 4(6)
- Maharashtra Co-operative Societies Act, 1960:
- Maharashtra Recognition of Trade Unions and Prevention of Unfair Labour Practices Act, 1971 (MRTU and PULP Act):
