Gratuity Can Be Denied Only When There Is Termination On Account Of Misconduct: SC [Read Judgment]

It is not enough that the alleged misconduct of the employee constitutes an offence involving moral turpitude as per the report of the domestic inquiry, the bench said.

The Supreme Court in Jorsingh Govind Vanjari Vs. Divisional Controller Maharashtra, State Road Transport Corporation, has held that in order to deny gratuity to an employee, it is not enough that the alleged misconduct of the employee constitutes an offence involving moral turpitude as per the report of the domestic inquiry, but there must be termination on account of the alleged misconduct, which constitutes an offence involving moral turpitude.

In the instant case, a bus conductor was terminated on the allegation that he had collected fare from six passengers without issuing tickets. In the domestic inquiry, he was found guilty but the Labour court set aside the termination order.

But taking note of the fact that he had crossed the age of superannuation, instead of reinstatement, 50 per cent of the back wages from the date of termination till the date of superannuation with all other service benefits were granted. On appeal by the employer, the Bombay High Court modified the award and held that the employee would not be entitled to the gratuity but a one-time compensation of an amount equivalent to 50 per cent of the back wages. This order was assailed before the Supreme Court.

Setting aside the high court order, the bench comprising Justice Kurian Joseph and Justice RF Nariman observed that the high court went wrong in holding that the Labour court did not follow the procedure. The court observed: “It appears that the high court itself has granted compensation since the court felt that the termination was unjustified and since reinstatement was not possible on account of superannuation. In case, the high court was of the view that termination was justified, it could not have ordered for payment of any compensation.”

Holding that the employee shall be entitled to gratuity in respect of his continuous service from his original appointment till the date of his superannuation, the bench observed: “In order to deny gratuity to an employee, it is not enough that the alleged misconduct of the employee constitutes an offence involving moral turpitude as per the report of the domestic inquiry. There must be termination on account of the alleged misconduct, which constitutes an offence involving moral turpitude.”

Read the Judgment here.