The Area Manager Vs the Chief Deputy Labour Commissioner

THE CHIEF DEPUTY LABOUR COMMISSIONER (CENTRAL) & APPELLATE AUTHORITY ”SHRAM SADAN”, III CROSS III MAIN, II PHASE TUMKUR ROAD YESHWANTHPUR BANGALORE-560022.

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THE ASST. LABOUR COMMISSIONER (CENTRAL) AND CONTROLLING AUTHORITY UNDER PAYMENT OF GRATUITY ACT ”SHRAM SADAN”, III CROSS III MAIN, II PHASE, TUMKUR ROAD YESHWANTHPUR BANGALORE-560022.

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SRI K S SRINIVASAIAH MAJOR

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HC-KAR

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AGED ABOUT 61 YEARS S/O SRI SINGARAIAH NO.404, 7^TH CROSS GANDHINAGAR MANDYA-571041.

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…RESPONDENTS

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(BY SMT. SHUBHA S. CGC FOR R1 AND R2; SMT. CHANDRAKALA, ADVOCATE FOR R3)

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THIS WP IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO CALL FOR THE RECORDS ON THE FILE OF THE RESPONDENT NO.1, APPELLATE AUTHORITY UNDER THE PAYMENT OF GRATUITY ACT, 1972, AND DY. CHIEF LABOUR COMMISSIONER (CENTRAL), AT BANGALORE, IN APPEAL NO.36(46) 2017-B1 DTD 8.5.18 ANNEXURE-A AND APPEAL NO.36(45) 2017-B1 DTD 28.3.2018 ANNEXURE-B RESPECTIVELY, AND ALSO ON THE FILE OF THE 2ND RESPONDENT IN GRATUITY APPLICATION NO.48(107) 2015-B3 DTD 27.4.17 ANNEXURE-C AND ETC.;

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THIS PETITION, COMING ON FOR FINAL HEARING, THIS DAY, ORDER WAS MADE THEREIN AS UNDER: CORAM: HON'BLE MR JUSTICE ANANT RAMANATH HEGDE

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ORAL ORDER

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Heard the learned counsel appearing for the petitioner and the learned counsel appearing for 3^rd respondent.

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This petition is filed impugning the order dated 08.05.2018 marked at Annexure – A. The Appellate Authority under the Payment of Gratuity Act, 1972 (for

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HC-KAR

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short “Act of 1972” ) has dismissed the appeal filed by the petitioner – Corporation and confirmed the order passed by the Controlling Authority.

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In terms of the very same order dated 28.03.2018, the appeal filed by the employee is also dismissed, thereby the order passed by the Controlling Authority is confirmed.

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In terms of the order dated 27.04.2017, the Controlling Authority has accepted the employee’s claim for payment of interest on delayed payment of gratuity in part, and directed the Corporation/employer to pay interest at a rate of 10% p.a. on the delayed period from 01.06.2015 to 20.12.2016 on the gratuity amount of Rs.10,00,000/-.

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Certain facts are not in dispute.

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Respondent No.3 joined the petitioner - Corporation as a Watchman on 23.07.1976. On

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HC-KAR

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02.06.2014, 3^rd respondent was suspended on the allegation of forgery and misappropriation. The suspension order was revoked on 31.10.2014. On 31.05.2015, 3^rd respondent - employee has attained the age of superannuation.

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It is relevant to mention that on 30.09.2015, CBI had arrested 3^rd respondent for commission of alleged offences under Sections 409, 468 and 201 of the Indian Penal Code r/w Sections 13(2) and 13(1)(c) and (d) of the Prevention of Corruption Act, 1988.

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It is submitted that 3^rd respondent - employee is convicted for the offences under Sections 409, 468 and 201 of the IPC r/w Sections 13(2) and Section 13(1)(c) and (d) of the Prevention of Corruption Act, 1988. It is further submitted that the employee has filed an appeal before this Court and the appeal is pending and the sentence is suspended.

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HC-KAR

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On 30.05.2015, a day before the retirement, disciplinary action was initiated against 3^rd respondent and vide order dated 26.09.2016, the Disciplinary Authority dropped the proceedings against 3^rd respondent.

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Since disciplinary proceedings against 3^rd respondent – employee was dropped, 3^rd respondent filed an application for payment of gratuity as 3^rd respondent had attained the age of superannuation on 31.05.2015. The application was filed on 23.12.2016.

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2^nd respondent i.e., the Controlling Authority directed the petitioner – Corporation to pay the employee, interest at a rate of 10% p.a. from 01.06.2015 to 20.12.2016, on Rs.10,00,000/-.

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It is not in dispute that on 20.12.2016, full gratuity amount of Rs.10,00,000/- was paid to 3^rd respondent – employee.

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HC-KAR

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Aggrieved by the said order awarding interest, the petitioner – Corporation had filed an appeal on the premise that 3^rd respondent is not entitled to any interest. 3^rd respondent – employee had filed an appeal before the Appellate Authority to award interest for a larger period than that was awarded by 2^nd respondent. As already noticed, both appeals are dismissed confirming the order passed by the Controlling Authority. Respondent No.3 has accepted the order passed by the Appellate Authority.

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Learned counsel appearing for the petitioner submits that there was no obligation for the petitioner – Corporation to pay the full amount of gratuity as the petitioner – Corporation was entitled to forfeit the entire amount of gratuity or part of the amount of gratuity under Section 4 (6)(a) of Act of 1972. It is urged that 3^rd respondent has caused loss to the petitioner/Corporation and the petitioner is justified in forfeiting the interest.

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HC-KAR

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It is the submission of the learned counsel

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appearing for the petitioner that if the employee’s services have been terminated for any act which constitutes an offence involving moral turpitude, and if that act is committed during the course of employment then the petitioner – Corporation is entitled to forfeit the gratuity either wholly or partially.

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Learned counsel appearing for 3^rd respondent on the other hand would contend that the gratuity amount payable to respondent No.3 was not paid in time and under the Act of 1972 the employer is required to pay interest on the delayed payment. It is her further submission that sub-section (6) of Section 4 is not applicable to the case on hand as there is no adjudication relating to alleged damages suffered by the petitioner. Thus, it is urged that the petition be dismissed.

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This Court has considered the contentions raised at the bar and perused the records.

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HC-KAR

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There is no dispute that 3^rd respondent was

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employee of the petitioner/Corporation. He has attained

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the age of superannuation on 31.05.2015. A day before his retirement, i.e. on 30.05.2015, the disciplinary enquiry was initiated against 3^rd respondent by framing the charges. The charge memo was issued in October, 2014. The proceeding was dropped vide order dated 26.09.2016. Sub-section (6) of Section 4 of Act of 1972, reads as under:-

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"4. Payment of Gratuity.-

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(1) Gratuity shall be payable to an employee on the termination of his employment after he has rendered continuous service for not less than five years, -

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(a) on his superannuation, or

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(b) on his retirement or resignation, or

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(c) on his death or disablement due to accident or disease:

x x x x

x x x x

x x x x x x x x

x x x x

(6) Notwithstanding anything contained in subsection (1), -

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(a) the gratuity of an employee, whose services have been terminated for any act, wilful omission or negligence causing any damage or loss to, or destruction of, property belonging to the employer, shall be forfeited to the extent of the damage or loss so caused.

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(b) the gratuity payable to an employee may be wholly or partially forfeited-

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(i) if the services of such employee have been terminated for his riotous or disorderly conduct or any other act of violence on his part, or

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(ii) if the services of such employee have been terminated for any act which 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 reading of the aforementioned provision, it

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is evident that under Section 4(6)(1)(a) of Act of 1972, the gratuity payable to a employee whose services have been terminated for an act, wilful omission or negligence causing any damages for loss or destruction of the property belonging to the petitioner, shall be forfeited to the extent loss or damages.

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To invoke Section 4(6)(a) of Act of 1972, the employer must establish that employee has been terminated for an act, wilful omission or negligence for causing any damage or loss or destruction of the property belonging to the petitioner.

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Admittedly, the disciplinary enquiry initiated

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against 3^rd respondent was dropped. There is no finding

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relating to the loss or destruction of the property or damage caused to the property of the employer. Admittedly, 3^rd respondent was not terminated from service and 3^rd respondent has attained the age of superannuation.

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This being the position, Section 4(6)(a) of Act of 1972 has no application.

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As far as Section 4(6)(b)(i) of Act of 1972 is concerned, it is noticed that in case, the employee has not been terminated for riotous or disorderly conduct or any other act of violence on his part. Such an allegation is not made against 3^rd respondent.

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As far as Section 4(6)(b)(ii) of Act of 1972 is concerned, in case an employee is terminated for any act which constituted an offence involving moral turpitude and if that such an offence is committed in the course of an employment, then the employer has the right to forfeit the part or whole of the gratuity amount.

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HC-KAR

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As already noticed, the employer has not terminated the employee/3^rd respondent for any misconduct alleged against him. On the other hand, it is noticed that in the disciplinary enquiry initiated against 3^rd respondent/ employee, was dropped and 3^rd respondent had attained the age of superannuation thereafter.

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It is not in dispute that 3^rd respondentemployee who was the accused in Special Criminal Case No.500/2015 on the file of XLVI Additional Sessions Judge, Bengaluru is convicted for the offences under Sections 409 and 201 of IPC read with Section 13(2), 13(1)(c) & (d) of Prevention of Corruption Act, 1988 vide judgment dated 27.11.2017. It is not in dispute that an appeal is filed against the State challenging the order of conviction as well as sentence and sentence is suspended by the Appellate Court.

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HC-KAR

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It is further relevant to note that by the time 3^rd respondent was convicted, he had already attained the age of superannuation.

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This being the position, Section 4 of Act of 1972

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does not enable the petitioner/Corporation to deduct the gratuity amount payable to 3^rd respondent.

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As can be noticed from the records, admittedly the gratuity amount is not paid within 30 days from the date of attaining superannuation. On an application moved by 3^rd respondent/employee, the Controlling Authority passed an order to pay interest from the date of retirement till the date on which the gratuity amount was paid. 3^rd respondent retired on 31.05.2015. The amount is paid on 20.12.2016 i.e. after one and half years from the date of retirement.

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Under Section 7(3) of Act of 1972, the petitioner has 30 days time to make payment from the date of retirement. Thus, the amount becomes due from

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HC-KAR

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01.07.2015 and the amount is paid on 20.12.2016. Thus,

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the petitioner is liable to pay interest from 01.07.2015 till 20.12.2016. However, the Controlling Authority has awarded interest from 01.06.2015 to 20.12.2016 instead of 01.07.2015. To that extent, the impugned order is to be set-aside. It is stated that the said amount which is payable to 3^rd respondent is not paid by the petitioner. Hence, the interest due to 3^rd respondent shall be paid within 45 days from the date of receipt of the copy of this order. In case, such amount is not paid, the petitioner shall pay interest at 6% p.a. on the amount due from the date of this order till payment.

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Hence, the following:-

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ORDER

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