M/S Sharang Plastengg (Private) Ltd. Thru. Managing Director and Another Vs Appellate Authority Under the Payment Gratuity Act,Dy. Labour Commissioner, Ayodhya and 2 Others

Neutral Citation No. - 2025:AHC-LKO:11828

Court No. - 7

Case :- WRIT - C No. - 1661 of 2025

Petitioner :- M/S Sharang Plastengg (Private) Ltd. Thru. Managing Director And Another Respondent :- Appellate Authority Under The Payment Gratuity Act,Dy. Labour Commissioner, Ayodhya And 2 Others Counsel for Petitioner :- Birendra Prasad Singh Counsel for Respondent :- C.S.C.,Akhilesh Upadhyay

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Hon'ble Pankaj Bhatia,J.

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Counter affidavit and rejoinder affidavit filed today in the Court are taken on record.

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Heard learned counsel for the petitioners and Shri Akhilesh Upadhyay, learned counsel for the respondent No.3.

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The present petition has been filed challenging an order dated 13.01.2025, whereby the appeal preferred by the petitioner under the Payment of Gratuity Act, 1972 against the order dated 30.11.2023 was dismissed.

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The facts, in brief, are that respondent No.3 was employed with the petitioner-company and as per the order of termination/dismissal passed against respondent No.3, it was stated that on 2nd August, 2016, the respondent had absconded from his duties. He also stated that the respondent has misappropriated a fund of Rs.18,93,032/-. It was also indicated that the act of cheating, fraud and dishonesty would constitute an offence involving moral turpitude and, therefore, the management has lost confidence and has decided to dismiss the respondent from the company with the immediate effect. Subsequently, an order dated 30.06.2017 was passed, whereby the gratuity amount, to which the respondent was entitled, was also forfeited on the allegation that the act of the respondent would constitute an offence involving moral turpitude.

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Respondent No.3 had moved an application before the controlling authority on 2nd June, 2016 stating that he was employed with the petitioner-company and without giving any notice, from 1st August, 2016 no work was being taken and the gratuity, bonus etc was also not paid. He stated that there is a monthly salary of Rs.25,000/- and even the said monthly salary has not been paid. He thus, claimed that he was entitled to the gratuity, salary, bonus etc. During the pendency of the proceedings as initiated by the respondent, the order of dismissal came to be passed. As the respondent had already initiated a dispute, the issue with regard to non-payment of gratuity, was considered by the prescribed authority in exercise of powers under Section 7 of the Payment of Gratuity Act. With regard to the right of forfeiture of the gratuity, issue No.2 was framed. While deciding the said issue, the prescribed authority held that the petitioner has forfeited the gratuity on the grounds that the act of the respondent was an offence involving moral turpitude. He further held that an FIR was also lodged by the petitioner against the respondent. However, a final report came to be lodged and thereafter, a protest petition was also filed, which too was dismissed, as such, the prescribed authority held that as the respondent's services had been terminated on 31.07.2016 and no charge was levelled against him, as such, the gratuity could not be forfeited in exercise of powers under Section 4(6) of the Payment of Gratuity Act. The other issues were also decided by the prescribed authority. Aggrieved against the said order, an appeal was preferred. As the appeal was decided on 24.08.2024, the petitioner aggrieved against the said order, preferred Writ-C No.8782 of 2024, which was allowed by this Court vide judgement dated 16.10.2024 and the matter was remanded for decision afresh after hearing the parties on merits in accordance with law. In terms of the said

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remand, the appeal was once again decided by means of the judgement dated 13.01.2025, which is impugned in the present writ petition.

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The submission of learned counsel for the petitioner is that in the impugned judgement dated 13.01.2025, no reasoning whatsoever has been recorded. He further argues that the prescribed authority had erred in recording that the date of dismissal of the respondent was 31.07.2016, whereas in own pleadings of respondent, he has stated that he was dismissed on 31.03.2017 and thus, the contention and finding recorded by the prescribed authority that he was terminated on 31.07.2016 is wholly erroneous. In the light of the said, he argues that both the said reasoning, the appellate order deserves to be quashed.

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Learned counsel for the respondent, on the other hand, argues that after the respondent was not being paid his salary despite there being no order, he had approached the Deputy Labour Commissioner by filing an appropriate application complaining that he was not being paid his salary, gratuity, bonus etc. The said application was filed in the year 2016, on which, the proceedings were initiated and afterthought, a dismissal order was passed by the petitioner on 31.03.2017. He, thus, argues that no error can be found in the order. He further argues that the appeal otherwise was without any merits and had to be dismissed.

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In the light of the arguments raised and recorded above, the question as arises is whether the petitioner as employer could have forfeited the gratuity in exercise of powers under Section 4(6)(b)(ii) of the Payment of Gratuity Act, which is quoted herein-under:-

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"if the services of such employee have been terminated for any act which

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constitutes an offence involving moral turpitude , provided that such offence is committed by him in the course of his employment."

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On a plain reading of the said provision, it is essential to exercise the said powers of forfeiture that the employee should have been terminated on any act which constitutes an offence involving moral turpitude and the said offence should be committed by him in the course of his employment. The phrase 'offence' used under Section 4(6)(b)(ii) of the Act cannot be an offence other than the offence prescribed under the Indian Penal Code.

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In the present case, an FIR was lodged against the respondent under Section 381 of the IPC. However, a final report came to be passed and the protest petition preferred by the petitioner was also dismissed as the offence alleged was neither proved nor established. There was clear absence of any material to form a view that the respondent was guilty of an offence involving moral turpitude. The phrase 'offence' has to be an offence prescribed under the Indian Penal Code and would necessarily have to be an offence which is alleged and proved. In the absence of any offence being proved against the respondent, the recourse to sub-section(ii)(b) of Section 4(6) was clearly not available to the employer.

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Irrespective of the date of termination as is being agitated before this Court, it is clear that the employer had no authority to withhold the gratuity in exercise of alleged rights as has been done in the present case, as such, I do not see any reason to interfere with the appellate order. Although, the appellate order is bereft of reasoning. However, as the issue involved in the present case was with regard to interpretation of the phrase 'offence' used under Section 4(6)(b)(ii) of the Payment of Gratuity Act, no useful purpose would be served in remanding

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the matter.

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The writ petition lacks merits and is, accordingly, dismissed .

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Order Date :- 27.2.2025 Ashutosh

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Digitally signed by :- ASHUTOSH PANDEY High Court of Judicature at Allahabad, Lucknow Bench

M/S Sharang Plastengg (Private) Ltd. Thru. Managing Director and Another v. Appellate Authority Under the Payment Gratuity Act,Dy. Labour Commissioner, Ayodhya and 2 Others

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M/S Sharang Plastengg (Private) Ltd. Thru. Managing Director and Another v. Appellate Authority Under the Payment Gratuity Act,Dy. Labour Commissioner, Ayodhya and 2 Others

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