UNION BANK OF INDIA AND OTHERS versus C.G. AJAY BABU AND ANOTHER

Citation: [2018] 9 S.C.R. 995 · Decided: 14-08-2018 · Supreme Court of India · Bench: KURIAN JOSEPH · Disposal: Dismissed

Cited by 3 judgment(s) · cites 1 · see the full citation network in Lexace

Judgment (excerpt)

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UNION BANK OF INDIA AND OTHERS
v.
C.G. AJAY BABU AND ANOTHER
(Civil Appeal No. 8251 of 2018)
AUGUST 14, 2018
[KURIAN JOSEPH AND SANJAY KISHAN KAUL, JJ.]
Payment of Gratuity Act, 1972: s.4(5) and (6) – Forfeiture of
gratuity is not automatic on dismissal from service.
Payment of Gratuity Act, 1972:  s.4 sub-sections 5 and 6 –
Forfeiture of gratuity – Bipartite settlement prevailing in the appellant
bank – Respondent, an employee of appellant-bank – Disciplinary
proceedings – Dismissal from service – Order of forfeiture of gratuity
on account of proved misconduct involving moral turpitude – High
Court held that respondent was entitled to gratuity as there was no
financial loss caused to bank and that as per bipartite settlement,
forfeiture of gratuity is permissible only in case misconduct leading
to dismissal has caused financial loss to the bank and only to that
extent – Held: It was not the case of the appellant-bank that the
misconduct of respondent caused any financial loss to the bank
and, therefore, forfeiture, taking recourse to sub-section (6) of s. 4
was wrongly resorted to by the  appellant-bank – Respondent-
employee is entitled to the gratuity.
Payment of Gratuity Act, 1972:  s.4(6)(a) and (b) – It is not
the conduct of a person involving moral turpitude that is required
for forfeiture of gratuity but the conduct or the act should constitute
an offence involving moral turpitude and convicted accordingly by
a court of competent jurisdiction – It is not for the employer to
decide whether an offence has been committed – It is for the court
– In the instant case, there is no conviction of respondent for
misconduct which according to bank is an offence involving moral
turpitude – Therefore, there is no justification for the forfeiture of
gratuity on the ground that the misconduct proved against him
amounted to acts involving moral turpitude.
Payment of Gratuity Act, 1972: The Act must prevail over the
Rules on Payment of Gratuity framed by the employer.
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[2018] 9 S.C.R. 995
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SUPREME COURT REPORTS
[2018] 9 S.C.R.
Dismissing the appeal, the Court
HELD: 1. The bipartite settlement provides for forfeiture
only if there is a loss caused on account of misconduct leading to
dismissal, is also not in dispute. There is no case for the Bank
that the misconduct of the respondent-employee has caused any
financial loss to the Bank, and therefore, forfeiture, taking
recourse to sub-Section (6) of Section 4 of the Act, cannot be
resorted to. Thus, the respondent-employee is entitled to the
protection of the bipartite settlement. [Para 15]  [1002-E-F]
2. Sub-Clause (a) and sub-Clause (b) of sub-Section (6) of
Section 4 of the Act operate in different fields and in different
circumstances.  Under sub-Clause (a) of sub-Section (6) of Section
4 of the Act , the forfeiture is to the extent of damage or loss
caused on account of the misconduct of the employee whereas
under sub-Clause (b), forfeiture is permissible either wholly or
partially in totally different circumstances. Sub-Clause (b)
operates either when the termination is on account of- (i) riotous
or (ii) disorderly or (iii) any other act of violence on the part of
the employee, and under Sub-Clause (ii) of sub-Section (6)(b)
when the termination is on account any act which constitutes an
offence involving moral turpitude committed during the course
of employment.  ‘Offence’ is defined, under The General Clause
Act, 1897, to mean “any act or omission made punishable by any
law for the time being in force”. [Paras 16, 17] [1003-B-D]
3.  It is not the conduct of a person involving moral turpitude
that is required for forfeiture of gratuity but the conduct or the
act should constitute an offence involving moral turpitude.  To
be an offence, the act should be made punishable under law. That
is absolutely in the realm of criminal law. It is not for the Bank to
decide whether an offence has been committed. It is for the court.
Apart from the disciplinary proceedings initiated by the appellant-
Bank, the Bank has not set the criminal law in motion either by
registering an FIR or by filing a criminal complaint so as to
establish that the misconduct leading to dismissal is an offence
involving moral turpitude. Under sub-Section (6)(b)(ii) of the Act,
forfeiture of gratuity is permissible only if the termination of an
employee is for any misconduct which constitutes an offence
involving moral turpitude, and convicted accordingly by a court
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