Gratuity Can Be Withheld For Recovery Of Dues From Employee: Supreme Court

The Supreme Court has observed that gratuity can be withheld for recovery of dues from an employee.

In this case, the Jharkhand High Court had rejected the contention raised by Steel Authority Of India Ltd., that the Company was entitled to withhold the gratuity of the employee from its retired employee for non-vacation of the company's accommodation and no interest was payable on the same. The High Court, to hold thus, had relied on a 2017 Supreme Court judgment in Ram Naresh Singh Vs. Bokaro Steel Ltd. & Ors. 

We are of the view that if an employee occupies a quarter beyond the specified period, the penal rent would be the natural consequence and such penal rent can be adjusted against the dues payable including gratuity, said the Apex Court bench comprising Justices Sanjay Kishan Kaul, Dinesh Maheshwari and Hrishikesh Roy while referring to ONGC Ltd. & Anr. Vs. V.U. Warrier (2005) 5 SCC 245.

In ONGC Ltd., the Supreme court had held that the Commission had right to effect recovery of its dues from any officer without his consent from gratuity. 

The court added that the reliance placed by the High court on the case of Ram Naresh Singh is misplaced as it is not even a judgment but an order in the given facts of the case. In the said order, the Court had held that Bokaro Steel Limited could not have retained the amount due to its employee on account of gratuity.

The court however dismissed the writ petition observing that the amount in question is also quite small and thus it is not a fit case for interference under Article 136 of the Constitution of India.

CASE: STEEL AUTHORITY OF INDIA LTD.vs. RAGHBENDRA SINGH [SLP 11025/2020]
CORAM:  Justices Sanjay Kishan Kaul, Dinesh Maheshwari and Hrishikesh Roy
COUNSEL: Sr. Adv Dhruv Mehta, AoR Yashraj Singh Deora 

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