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TMI Blog2024 (2) TMI 719X X X X Extracts X X X X X X X X Extracts X X X X ..... that it is not for the Bank to decide whether an offence has been committed. It is for the court. This emphatic statement on point of law and interpretation by the Hon ble Supreme Court is binding and fully applicable to the facts of this case - Even though in Union Bank of India, the management had not registered an FIR, the principle laid down therein is on the very interpretation of said provision of section 4(6)(b)(ii) of the Act and would hold ground. This aspect has been reiterated in and applied by a Division Bench of this Court in Rajiv Saxena v. The Chief General Manager Ors. [ 2018 (11) TMI 1952 - DELHI HIGH COURT ], where gratuity was forfeited by the management pursuant to punishment of compulsory retirement by the disciplinary authority and a registration of a criminal case by the CBI. In fact, in that case a show cause notice specific on the issue of forfeiture of gratuity was issued as well. In the said petition preferred by the worker challenging forfeiture of gratuity, this Court held that the case therein had progressed merely till the stage of filing of charge sheet. Subsequently, it observed that, The criminal court concerned will hereafter apply its mi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng Authority had directed the management to pay the gratuity amount of Rs. 3,43,073/- along with simple interest at the rate of 10% per annum with effect from 13th July, 2012 till the date of actual payment in favour of Petitioner No. 1 and Rs. 3,96,761/- along with simple interest at the rate of 10% per annum with effect from 22nd January, 2013 in favour Petitioner No. 2 for delayed payment. Factual Background 2. Petitioner No. 1 was appointed as Accounts Assistant in the Finance Department, Northern Region NACIL [formerly known as Indian Airlines Limited ( IAL )] in April, 1990 whereas Petitioner No. 2 was appointed as Traffic Superintendent in the Northern Region NACIL in December, 1990 respectively. Vide letters dated 7th December, 2000 and 22nd December, 2000 the petitioners were suspended from their services with respondent- management on account of serious allegations of misconduct. A First Information Report ( FIR ) dated 24th May, 2000 was registered by the Central Bureau of Investigation ( CBI ) being RC 4(S)/2000-SIU.I under sections 120-B read with sections 380, 408, 419, 420, 467, 468, 471, and 511 of the Indian Penal Code, 1860 in which charge sheet ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Bikash Sarkar Ors. (2006) 2 CAL LT89 (HC) which held that the principles of natural justice are required to be complied with. 4.3 The avowed reason for forfeiture of gratuity under section 4(6)(b)(i) and (ii) of the Act was on account of the management s assertion that the services of the employees had been terminated for an act which constituted an offence involving moral turpitude and committed by them during the course of their employment. Learned counsel for the petitioner submitted that even assuming that the alleged offence involved moral turpitude, it had not led to any conviction and had not been proved in accordance with law yet. In this regard, he drew the Court s attention to the FIR lodged by CBI in 2000 and the charge sheet filed subsequently, however, no charges have been framed against the petitioners till date, even after the passage of over 20 years. 4.4 Forfeiture of gratuity under section 4(6)(a) of the Act involves an assessment of damage for loss which had been caused to the employer due to the offending act of the employee and if so established, his gratuity could be forfeited only to the extent of damage or loss so caused. It was submitted that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... financial loss to the management/Bank. In light of such settlement, the Court held that section 4(6)(a) and (b) of the Act are to be read together, and forfeiture of gratuity is permissible only to the extent of the loss caused by the delinquent employee. As no loss was caused, granting protection of the bipartite settlement, it was held that gratuity cannot be forfeited. The said decision also cemented that forfeiture was permissible only if termination of the employee is due to misconduct involving an offence of moral turpitude and subsequent conviction by a court of competent jurisdiction. Respondent s counsel had no quarrel with the submission of the petitioners counsel inasmuch as conviction is necessary for any forfeiture of gratuity. However, it was contended that as the petitioners have not been convicted by the criminal court yet, the present petitions are premature and academic at this stage. The said decision was also distinguished on facts since in Union Bank of India (supra) the employer had not set the criminal law in motion by registering an FIR or filing a criminal complaint, which was not the case as regards the petitioners herein as an FIR had been registered by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at since there was no set format under the Act for issuance of show cause for forfeiture of gratuity, principles of natural justice were already complied with as the petitioners were provided an opportunity to object to the punishment proposed. 5.6 Respondent s counsel further pointed out that the petitioners dismissal was challenged before the Ld. Labour Court and order dated 10th August, 2018 was passed stating that the enquiry conducted by the Enquiry Officer was in violation of principles of natural justice since the management had not examined the witnesses and adduced evidence. It was held that the management had reserved its rights to adduce evidence on merits and therefore, an opportunity ought to be granted to the management in that regard. 5.7 The management challenged the said decision of the Ld. Industrial Tribunal before this Court in W.P.(C) Nos. 426/2019 and 475/2019 where an order dated 3rd July, 2019 was passed. It was noted by this Court that the management had stated that these were cases of loss of confidence by the management and actually no enquiry was required to be conducted in consonance with the principles laid down by this Court in State Bank ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ith Sh. Sukhbir Singh Sangwan on account of payment of gratuity and all other terminal dues to his legal representatives, the respondent s counsel pointed out that the same was done only because Sh. Sukhbir Singh Sangwan had expired even before the disciplinary authority could take any action, and therefore, the question of parity does not arise in the case of the petitioners. 6. In rejoinder, learned counsel for the petitioners submitted that the management had shifted its stand from termination due to misconduct of the petitioners to loss of confidence , however, forfeiture of gratuity cannot be premised on termination based on loss of confidence. By having improvised their stand in order to avoid the challenge to enquiry proceedings, the management had therefore, in effect, given up the issue of misconduct. Accordingly, they were no longer empowered to forfeit the gratuity. The award dated 31st May, 2023 was therefore only on the issue of loss of confidence and did not render a conviction or touch upon the issue of misconduct. Analysis 7. Heard the learned counsel for the parties and examined the documents placed on record. The central issue relates to forfeitu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er on the necessity of a specific and separate notice to be issued under the Act for forfeiture, in view of the notice of dismissal of services without any terminal benefits being given above; as also in light of opinion of this Court on the legality of the forfeiture itself (as elaborated hereunder). 11. It is not denied that an FIR was lodged by the CBI in the year 2000 and a charge sheet was also filed subsequently. It is another matter that charges have not been framed for the last two decades in the proceedings arising out of the said FIR and charge sheet. This, however, cannot be a reason to contend, at this stage, that petitioners will possibly be convicted for the offence charged. It would be up to the petitioners / State to seek whatever remedies are at their disposal to complain of and assail this long delay in consideration of the charge sheet and completion of the criminal procedure in accordance with law and before the court of competent jurisdiction. 12. It will be then upto the criminal court to apply its mind on the charge sheet, decide whether or not to frame charges and as to whether the petitioners have to be sent for trial, and finally whether they will be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ds to the framing of charges in the departmental proceedings involves moral turpitude, we are afraid the contention cannot be appreciated. 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 of competent jurisdiction. (emphasis supplied) 14. It has been categorically held by the Hon ble Supreme Court that it is not the conduct o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 as discussed hereinbefore. The Court relied upon the decision in Union Bank of India (supra) and held that the decision of the management in forfeiting the gratuity of the worker was premature and could not have been taken at that stage. This Court accordingly set aside the order forfeiting the gratuity of the worker. 17. Other courts have also followed Union Bank of India (supra) and held that forfeiture of the gratuity would require initiation of criminal proceedings that would have culminated in conviction for an offence. The High Court of Judicature at Bombay in Western Coal Fields Ltd. v. The Presiding Officer Appellate Authority under the Payment of Gratuity Act, 1972 Anr. 2020 SCC OnLine Bom 168 held as under: 16. Therefore, for an employer to deprive an employee of gratuity under Section 4(6)(b)(ii) of the said Act, would necessarily require initiation of criminal proceedings that would culminate in conviction for an offence . The ..... X X X X Extracts X X X X X X X X Extracts X X X X
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