Gratuity, a retirement benefit, is given force of law by the Payment of Gratuity Act, 1972 (‘the Act’). The Act gives a statutory right of gratuity to employees for rendering continuous service for at least 5 years inter alia lays down the principles for quantification and conditions for denial of gratuity. Section 4 of the Act deals with payment of gratuity and in Section 4(6)(b)(ii) it is categorically stated that the gratuity payable to an employee, may be wholly or partially forfeited, if the services of such employee have been terminated for his riotous or disorderly conduct or any act of violence on his part or any act which constitutes an offence involving moral turpitude, provided that such offence is committed by him in the course of his employment.
The recent Supreme Court decision in Jorsingh Govind Vanjari v. Divisional Controller Maharashtra, State Road Transport Corporation[1], the apex court has opined that in order to deny gratuity to an employee, there must be termination on account of the alleged misconduct, which constitutes an offence involving moral turpitude. And this has confirmed the views taken by the apex court in Jaswant Singh Gill v. Bharat Coking Coal Ltd [2], wherein it was held that termination of services of employee for riotous or disorderly conduct or any other act of violence on his part or conviction for an offence involving moral turpitude is imperative for the forfeiture of the gratuity, whether wholly or partially. In Ramchandra S. Joshi v. Bank of Baroda[3], it was held by Bombay High Court that apart from the losses suffered, gratuity can also be forfeited if services of such employee have been terminated for any act which constitutes an offence involving moral turpitude. Karnataka High Court, in the case of Bharath Gold Mines Ltd. vs The Regional Labour Commissioner (Central), Bangalore[4], it was held by the court that anything done contrary to justice, honesty, modesty or good morals involves moral turpitude, hence theft amounts to moral turpitude and gratuity payable to such employee can be wholly forfeited.
Bombay High Court in the case Vithal Rangnath Darekar v. New India Insurance Co. Ltd.[5], has opined that unless the acts of moral turpitude are at place or in the course of his employment’, the gratuity cannot be forfeited. This case has delimited the scope of ‘moral turpitude’. Similarly, in A. Padmanabhan v. Joint Commissioner of Labour and Ors[6], Madras High Court held that the allegation was only of falsification of accounts and thereby making some financial gain, would not amount to an act of moral turpitude.
It can be concluded that in order to forfeit the gratuity amount it is mandatory that provisions enunciated in the Act shall be well within the principles of natural justice. Although term ‘Moral turpitude’ is a phrase that cannot be limited to any particular definition and needs to be evaluated in the given factual matrix, it is well settled that in order to deny gratuity to an employee, it is not enough that the alleged misconduct of the employee constitutes an offence involving moral turpitude as per the report of the domestic inquiry. There must be termination on account of the alleged misconduct, which constitutes an offence involving moral turpitude..
[1] (2017) 2 SCC 12
[2] (2007) 1 SCC 663
[3] 2010 (6) Mah LJ 421
[4] ILR 1986 KAR 2755
[5] 2012 (3) Mah LJ 919
[6] (2010) III LLJ 792 Mad.