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TMI Blog2018 (11) TMI 1952X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 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 con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ections 13(2) and 13(1)(d) of the Prevention of Corruption Act 1988 ('PC Act'). 5. Two consequential actions followed. One was that in the pension payment order dated 10th July 2017, there was a cut in the pension payable to the Appellant. However, that does not form the subject matter of the present appeal since, admittedly, the Appellant has challenged that order separately in a writ petition which is pending before the High Court of Judicature at Allahabad and in which notice has been issued on 18th September 2017. 6. The other action was that a show cause notice was issued on 7th December 2016 by the respondent-Bank to the Appellant who replied to the same on 25th January 2017. After considering the said reply, by letter No. ZO:NZ:HRM:208/5879 dated 15th February 2017 issued to the Appellant, the Respondent Bank stated as under: A show cause notice dated 07.12.2016 was served on you for forfeiture of full amount of gratuity payable to you. You have submitted your reply vide letter dated 25.01.2017 in response to the said show cause notice. Your reply has been considered and keeping in view all facts and circumstances in the matter, it is observed that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the decision of the Supreme Court in Union Bank of India v. C.G. Ajay Babu (2018) 9 SCC 529, he submitted that what should constitute an offence involving moral turpitude was in the realm of criminal law and it was for a criminal court to decide that issue. He submitted that after the order was passed by the Disciplinary Authority, only an FIR was registered by the CBI and, therefore, it is premature for the respondent-Bank to invoke Section 4(6)(b) PG Act so as to forfeit the entire gratuity payable to the Appellant. 11. Without prejudice to the above submission, he further submitted that even if the respondent-Bank were to invoke Section 4(6)(a) PG Act, then again, without quantifying the actual loss cause to the respondent-Bank, the gratuity could not have been forfeited. Drawing a distinction between the exposure of the Bank to losses and the actual loss suffered by it, he placed reliance upon the decision of the Full Bench of Punjab Haryana High Court in UCO Bank v. Anju Mathur 2013 (5) LLN 382 (P H). 12. Appearing on behalf of the respondent-Bank, Mr. Bhupender Singh Chauhan, learned counsel, submitted that there was a clear finding in the Inquiry Report which has be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the employee which is the reason for the termination has caused any damage or loss to, or destruction of, property belonging to the employee . In such a case, the forfeiture will be only to the extent of the damage or loss so caused . In other words, unless there is a quantification of the damage or loss caused to the bank in the present case, it would not be possible for the bank to invoke Section 4(6)(a) of the PG Act. As already noticed, in the present case, in fact, the bank has not invoked Section 4(6)(a) PG Act. Therefore, this Court need go into any great detail in considering this question or the decision in Anju Mathur (supra). 16. Turning now to Section 4(6)(b), it sets out two further grounds on which there can be a forfeiture of the gratuity payable to a terminated employee. Sub-clause (i) permits forfeiture of gratuity wholly or partially if the reason for termination of the employee's services is for riotous or disorderly conduct or any other act of violence on his part . Clearly, there was no such charge against the Appellant in the present case regarding any riotous or disorderly conduct or any other act of violence and, therefore, the question of sub-c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the employer or destruction of property belonging to the employer, the loss can be recovered from the gratuity by way of forfeiture. Whereas under sub-Clause (b) of sub-Section (6), the forfeiture of gratuity, either wholly or partially, is permissible under two situations- (i) in case the termination of an employee is on account of riotous or disorderly conduct or any other act of violence on his part, (ii) if the termination is for any act which constitutes an offence involving moral turpitude and the offence is committed by the employee in the course of his employment. Thus, 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), 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 terminatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 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. 23. 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. 24. Consequently, 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. 25. It is further clarified that if and when there is a final determination by the competent criminal court on the acts allegedly committed by the Appellant which purportedly constitute offences involving moral turpitude, it would be open to the respondent-Bank to initiate action under the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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