2018 (11) TMI 1952 - HC - Indian Laws

Termination for involving in moral turpitude - forfeiture of gratuity - Imposition of penalty of compulsory retirement on the Appellant consequent to the findings returned by the Inquiry Officer - whether the penalty inflicted was not proportionate to the misconduct? - HELD THAT - In the facts of the present case, while it is not in issue that consequent upon the order of the Disciplinary Authority, the CBI registered a case on 28th September 2016 against the Appellant and certain others for the aforementioned offences under the IPC and the PC Act, that case has as of now progressed only to the stage of filing of the charge sheet. The criminal court concerned will hereafter apply its mind to the contents of said charge sheet and pass an order on charge. The progress of the criminal case will depend on whether charges are framed against the Appellant; whether he is sent up for trial on those charges; whether he is convicted for the offences with which he is charged and whether such conviction attains finality. A further question would then arise as to whether the offences for which the Appellant is ultimately convicted would involve moral turpitude, as is mentioned in sub-clause (ii) of Section 4(6)(b) PG Act. Therefore, at this stage, it would be premature for the respondent-Bank to conclude that the acts for which the Appellant's services were terminated constitute offences involving moral turpitude. The decision in C.G. Ajay Babu 2018 (8) TMI 934 - SUPREME COURT , therefore, clearly explains that the action of forfeiting the gratuity payable to an employee cannot be taken at the stage when there is no final determination that such acts of the employee in fact constitute an offence involving moral turpitude. That determination can only be made by a criminal court and, thereafter, that determination must attain finality. The net result, as far as the present case is concerned, is that the impugned decision of the respondent-Bank in forfeiting the entire gratuity of the Appellant was premature and could not have been taken at the stage at which it was, i.e. even before the determination by a criminal court that the act committed by the Appellant constituted an offence involving moral turpitude. The impugned order of the learned Single Judge of this Court dated 9th March 2018 and, consequently, the order of the respondent-Bank dated 15th February 2017 by which the entire amount of gratuity payable to the Appellant was forfeited under Section 4(6)(b) of the PG Act are hereby set aside - gratuity amount withheld shall now be released to the Appellant by the Respondent no later than four weeks from today - Appeal disposed off.

Summary

Issues Involved:
1. Delay in filing the appeal.
2. Legality of the penalty of compulsory retirement.
3. Forfeiture of gratuity under Section 4(6)(b) of the Payment of Gratuity Act, 1972.
4. Deduction of 1/3rd pension.

Issue-wise Detailed Analysis:

1. Delay in filing the appeal:

The court condoned the delay in filing the appeal for the reasons stated in the application and disposed of the application accordingly.

2. Legality of the penalty of compulsory retirement:

The Appellant challenged the order dated 9th March 2018 by a learned Single Judge dismissing W.P.(C) 2156/2018, which upheld the Disciplinary Authority's order imposing the penalty of compulsory retirement. The Disciplinary Authority found the Appellant guilty of seven charges, including reckless financing and misuse of position, concluding that his actions were unbecoming of an officer. The learned Single Judge found the penalty commensurate with the misconduct and dismissed the petition.

3. Forfeiture of gratuity under Section 4(6)(b) of the Payment of Gratuity Act, 1972:

The respondent-Bank invoked Section 4(6)(b) of the PG Act to forfeit the full amount of gratuity payable to the Appellant. The learned Single Judge upheld this forfeiture, but the Appellant argued that the act for which his services were terminated should constitute an offence involving moral turpitude, which only a criminal court could determine. The court observed that the learned Single Judge erred in assuming the Appellant had a remedy under the PG Act for forfeiture of gratuity. The court explained that forfeiture under Section 4(6)(b) requires a final determination by a criminal court that the act constitutes an offence involving moral turpitude. Since the criminal case against the Appellant was still at the charge sheet stage, the forfeiture was deemed premature. Consequently, the impugned order of the learned Single Judge and the respondent-Bank's order forfeiting the gratuity were set aside. The court clarified that the respondent-Bank could initiate forfeiture action if a criminal court later determined that the Appellant's acts constituted moral turpitude.

4. Deduction of 1/3rd pension:

The learned Single Judge upheld the deduction of 1/3rd of the Appellant's pension, but the court noted that this issue was pending in a separate writ petition in the High Court of Judicature at Allahabad. Therefore, the judgment of the learned Single Judge on this matter was set aside, and it was clarified that the issue would be decided on merits by the Allahabad High Court.

Conclusion:

The appeal was disposed of with the court setting aside the orders related to the forfeiture of gratuity and clarifying that the issue of pension deduction would be decided by the Allahabad High Court. The gratuity amount withheld was ordered to be released to the Appellant within four weeks.