GRATUITY IS NOT A CHARITY

[Mr. M. GOVINDARAJAN]

In SURENDRA PRASAD VERSUS UNION OF INDIA & ORS. - 2023 (9) TMI 1332 - CALCUTTA HIGH COURT , the petitioner was given employment in Food Corporation of India (‘FCI’ for short) and placed in AG(IIID) post on 31.02.1978.  He was given promotion to AG (IID) and then AG(ID).  The petitioner was in charge of two depots at F.S.D. Chanpatia.   In the year 2012 physical verification of the sheds was conducted by the High Authorities and found shortage of food grains.  The audit of the depots was also conducted.  The petitioner along with his officials was placed under suspension on 01.06.2012.  They were restored on 17.10.2012 and the petitioner was posted Suri and later in Abdarpur in West Bengal.

Charge sheets were issued to the petitioner on 19.01.2013 and disciplinary proceedings were initiated against him.  In the meanwhile the petitioner retired on 30.11.2013 on superannuation.  The Inquiry Officer conducted the enquiry and submitted his report to the General Manager on 31.12.2015.  The General Manager, on the basis of inquiry report, put the petitioner in the minimum of the reduced pay scale AG (IIID).  He also directed the recovery of Rs.1 lakh from the pensionary benefits of the petitioner other than gratuity.

Since the gratuity has not been paid to him the petitioner approached the Regional Labor Commissioner for the payment of Rs. 10 lakhs towards gratuity.  The Regional Commissioner assigned the work to Assistant Labor Commissioner, who gave directions for the payment of Rs.3,48,538/- as gratuity to the petitioner.  The petitioner, being aggrieved against the order of Assistant Labor Commissioner, filed an appeal before the Deputy Chier Labor Commissioner.  Food Corporation of India submitted the following before the Deputy Chief Labor Commissioner-

• A police case has been registered against the petitioner in case no. 170/2010 at Chanpatia police station.
• A CBI case has been registered against the petitioner in case No. RC 203 2012 A 0028 dated December 27, 2012.
• Another police case No. 512/2004, dated 12.12.2004 under section 120 of IPC was pending against the petitioner.
• A CBI case bearing No. RCO23 2014 A0018 dated August 30, 2014, under Section 120B and 420 of the Indian Penal Code, 1860 and under Section13 (2) read with Section 13(1)(d) of Prevention of Corruption Act, 1988 had been registered by CBI/ACB/Patna against the  petitioner.
• A sum of Rs. 2,47,523/-was outstanding against the petitioner for which a demand notice under Ref. No. A/23(Vig)/NDC/2006-15/261(II) dated June 6, 2016 had been served on him.

The Deputy Chief Labor Commissioner considered the above cases amount to ‘offence involving moral turpitude’  under section 4(6)(b)(ii) of Payment of Gratuity Act.  He set aside the order of Assistant Commissioner and rejected the claim of the petitioner for Rs.10 lakhs.

The petitioner, being aggrieved against the order Deputy Chief Labor Commissioner, filed a writ petition before the High Court. The Single Judge of the High Court dismissed the writ petition on jurisdictional grounds without going into the merits of the case.  Against the order the petitioner filed the present appeal before the High Court.  The petitioner submitted the following before the High Court-

• The Deputy Chief Labour Commissioner failed to appreciate the scope of Section 4(6) of the Payment of Gratuity Act, 1972 and that payment of gratuity is not a gesture of charity, rather is a recognized statutory right to be provided in favor of the employee.
• He was never terminated from service and therefore is entitled to gratuity.
• The precedents specified and the discussion pertaining to the meaning and scope of ‘moral turpitude’ by the Deputy Chief Labour Commissioner in the order dated March 16, 2018, does not have any bearing on the facts and circumstances of the present case.
• The respondent authorities have attempted to falsely implicate the petitioner in cases including G.R. Case No. 5373/2004 where he has been acquitted on all counts by the learned Judicial Magistrate-I-cum-Additional Munsif.

The respondents submitted the following before the High Court-

• The petitioner has multiple cases against him including CBI cases.
• An amount of Rs. 2,47,523/-  has remained outstanding against the petitioner.
• The petitioner did not serve faithfully to his employer, i.e., FCI and the same would count as offence constituting ‘moral turpitude’ within the scope of Section 4(6) of the Payment of Gratuity Act, 1972.
• The petitioner’s pay was reduced to Rs. 9,300/-   after the penalty order dated August 31, 2015 and that the petitioner has the aforementioned cases pending against him which are both grounds for finding the petitioner guilty of ‘offence involving moral turpitude’. The respondents submit that the Deputy Chief Labour Commissioner had taken consideration of both such issues and therefore has correctly denied gratuity to the petitioner by invoking Section 4(6)(b)(ii) of the Payment of Gratuity Act, 1972.
• The present writ petition is not maintainable in law as the High Court at Patna already dismissed the previous writ petition namely C.W.J.C. No. 12767 of 2018 on November 5, 2020, where the  High Court at Patna did not grant leave to the petitioner to initiate any fresh proceedings on the same cause of action.

The High Court considered the submissions made by both the employee and the Deputy Chief Labor Commissioner.  The High Court observed that The Deputy Chief Labour Commissioner decided upon the issue of payment of gratuity depending on the possibility that the petitioner could be found guilty in the pending CBI proceedings against him.  The Deputy Chief Labour Commissioner discussed not only the etymology of ‘moral turpitude’ but offered insight on the phrase by quoting an expansive collection of philosophers and dictionaries. The said order followed this rather drawn-out discussion over ‘moral turpitude’ by citing judgments from a plethora of various High Courts.  The High Court that the judgments relied on by the respondents are having no relevance to the present case because the said judgments pertain to employees who was dismissed or terminated from the services due to their actions in the course of their employments.  In the present case the petitioner was not dismissed or terminated from the services because of the penalty imposed on the petitioner.  A sum of Rs.1 lakh was directed to be recovered from the petitioner from the retirement benefits other than gratuity. 

The High Court analyzed the provisions of Section 4 of the Payment of Gratuity Act and various judgments.  The High Court observed as below-

• Payment of gratuity is not charity, rather is a statutory right recognized by the Payment of Gratuity Act, 1972.
• Section 4(6) of the Payment of Gratuity Act, 1972 stipulates specific conditions where the employer may forfeit gratuity.  The alleged misconduct of the employee as per the report of the domestic inquiry is not enough to constitute an ‘offence involving moral turpitude’, rather termination of services on account of the alleged misconduct, which constitutes an offence involving moral turpitude is essential for forfeiture of payment of gratuity.
• ‘Offences involving moral turpitude’ must be offences punishable under law and duly established in a court of law, i.e., the petitioner ought to have been convicted of such offences in a court of law.
• The petitioner was never terminated from services and cases including CBI.

The High Court set aside the order of Deputy Chief Labor Commissioner and upheld the order of Assistant Labor Commissioner.  The High Court directed the authorities to pay the gratuity along with interest @ 8% from one month after the date of retirement of his superannuation within four months.