Gujarat High Court
Paschim Gujarat Vij Company Limited vs Ratilal Bhikhabhai Savaliya on 25 July, 2025
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IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/SPECIAL CIVIL APPLICATION NO. 6574 of 2023
With
CIVIL APPLICATION (FOR VACATING INTERIM RELIEF) NO. 1 of 2023
In R/SPECIAL CIVIL APPLICATION NO. 6574 of 2023
FOR APPROVAL AND SIGNATURE:
HONOURABLE MRS. JUSTICE M. K. THAKKER
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Approved for Reporting Yes No
NO
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PASCHIM GUJARAT VIJ COMPANY LIMITED
Versus
RATILAL BHIKHABHAI SAVALIYA & ORS.
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Appearance:
MR DIPAK R DAVE(1232) for the Petitioner(s) No. 1
MR ADITYA DAVDA, ASST.GOVERNMENT PLEADER for the
Respondent(s) No. 2,3
MR YOGESH G KANADE(3114) for the Respondent(s) No. 1
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CORAM:HONOURABLE MRS. JUSTICE M. K. THAKKER
Date : 25/07/2025
ORAL JUDGMENT
1 Rule, returnable forthwith. Learned advocate
MR.Kanade and learned AGP Mr.Aditya Davda waive
service of notice of Rule for and on behalf of the
respective respondents.
2 This petition is filed under Articles 226 and 227 of the
Constitution of India, challenging the award passed
by the learned Controlling Authority under the
Payment of Gratuity Act, 1972 ('the Act' referred
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hereinafter), whereby the petitioner has been
directed to pay a sum of ₹10,00,000/- with interest at
the rate of 10% from 08.05.2011 to the respondent-
employee towards gratuity, as well as the order
passed by the learned Appellate Authority rejecting
the appeal filed by the petitioner.
3 It is the case of the present petitioner that the
respondent was serving as an Executive Engineer
with the petitioner, and during his tenure, he was
posted at the Division Office, Junagadh. At that point
in time, the respondent committed serious
misconduct in the capacity of Executive Engineer,
and therefore, a chargesheet was issued to him on
02.02.2010. Pursuant to a departmental inquiry,
conducted in accordance with the principles of
natural justice, the services of the respondent came
to be terminated on 07.05.2011. Since another
inquiry pursuant to a second chargesheet dated
07.07.2010 was pending at the time of issuance of
the first chargesheet, the order of termination
excluded a direction to withhold retiral benefits such
as Provident Fund (PF), Contributory Provident Fund
(CPF), Gratuity, SVRC, DBFC, and leave encashment.
3.1 The respondent challenged the order of
termination by filing a departmental appeal, which
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came to be rejected on 19.08.2014. As the said
order was not carried further, it attained finality.
As regards the second chargesheet, inquiry
proceedings continued, and based on the inquiry
officer's report, a show cause notice dated
12.10.2012 came to be issued to the respondent,
calling upon him to explain as to why the gratuity
and other retirement dues should not be forfeited.
In response thereto, the respondent submitted a
reply on 21.05.2012. Thereafter, an order dated
13.11.2012 came to be passed, forfeiting all
terminal dues, including gratuity. This order also
attained finality, as it was not challenged.
3.2 However, after a delay of nearly eight years, the
respondent approached the learned Controlling
Authority by filing Form 'N' on 26.10.2020. Along
with the said application, an application for
condonation of delay was also filed. Due to non-
appearance of the respondent, the learned
Controlling Authority dismissed the application on
16.01.2021. Subsequently, a review application
came to be filed with a delay of 348 days.
However, instead of deciding the application for
condonation of delay in the review, the learned
Controlling Authority proceeded to decide the main
application on merits and, by order dated
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16.06.2022, directed the present petitioner to pay
gratuity amounting to ₹10,00,000/- with interest.
3.3 The said order was challenged by the petitioner
before the learned Appellate Authority. However,
without considering the contentions raised in the
appeal, the learned Appellate Authority summarily
dismissed the appeal, observing that a detailed
examination had already been carried out by the
learned Controlling Authority and therefore no
interference was warranted. Being aggrieved by
both the aforesaid orders passed by the learned
Controlling Authority and the learned Appellate
Authority, the petitioner has preferred the present
petition under Articles 226 and 227 of the
Constitution of India.
4 Heard the learned advocate Mr.Dipak Dave for the
petitioner and the learned advocate Mr.Yogesh
Kanade for the respondent.
5 Learned advocate Mr. Dave submits that the learned
Controlling Authority has committed a grave error in
passing the impugned order without deciding the
application for condonation of delay filed in the main
application, or the application for condonation of
delay filed in the review application, or even the
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review application itself. Learned advocate Mr. Dave
submits that though the review itself was not
maintainable, instead of passing a separate order on
the review application or rejecting it on that ground,
the learned Controlling Authority proceeded to
decide the main application and directed the present
petitioner to pay the gratuity amount.
5.1 Learned advocate Mr. Dave further submits that
while doing so, the learned Controlling Authority
has exercised powers akin to an Appellate
Authority, by virtually setting aside the order of
forfeiture of gratuity, which had already attained
finality in the absence of any challenge. Such
action, it is submitted, is wholly beyond the
jurisdiction of the learned Controlling Authority.
Learned advocate Mr. Dave contends that instead
of rejecting the belated and untenable application
filed by the respondent, the learned Controlling
Authority proceeded to direct the petitioner to pay
the gratuity amount, which is legally
unsustainable.
5.2 Learned advocate Mr.Dave further submits that
the learned Controlling Authority has erroneously
relied upon the decision of the Apex Court in the
case of Jaswant Singh Gill vs. Bharat Coking
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Coal Ltd., reported in (2006) 11 SCALE 624,
which has subsequently been overruled by the
Apex Court in Mahanadi Coalfields Ltd. vs.
Rabindranath Choubey, reported in (2020) 18
SCC 71. Relying upon the overruled decision, the
Controlling Authority incorrectly held that
forfeiture of gratuity can only be ordered prior to
termination of service, and since in the present
case the order of termination was passed first and
forfeiture was ordered later, the same was held to
be illegal.
5.3 Learned advocate Mr. Dave submits that there
is no such mandatory requirement under the Act,
1972. On the contrary, Section 4(6) of the Act
specifically permits forfeiture of gratuity where an
employee is terminated for any act, willful
omission, or negligence causing damage or loss to
the employer, to the extent of the damage or loss
so caused. Learned advocate Mr. Dave points out
that the petitioner had duly established a financial
loss to the tune of ₹5.88 crore caused by the
respondent during his service, and accordingly, all
terminal dues including gratuity were forfeited by
a valid and reasoned order which was never
challenged and hence attained finality. Learned
advocate Mr.Dave further relies on the decision of
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this Court in Special Civil Application No. 6835 of
2019 to submit that under Section 4(6) of the Act,
in cases where the employee causes pecuniary
loss, the employer is well within its rights to forfeit
gratuity and other terminal benefits.
5.4 Learned advocate Mr. Dave therefore submits
that the orders passed by the learned Controlling
Authority as well as the learned Appellate
Authority, having been passed without jurisdiction
and in disregard of binding precedent and settled
legal provisions, are required to be quashed and
set aside. Accordingly, learned advocate Mr.Dave
prays that the present petition be allowed.
6 Per contra, learned advocate Mr. Yogesh Kanade,
appearing for the respondent, submits that even if
the respondent did not challenge the order passed by
the petitioner in the departmental inquiry terminating
the services of the respondent employee and
forfeiting the gratuity amount, the onus nonetheless
lies upon the present petitioner to establish its case
by leading cogent and reliable evidence.
6.1 Learned advocate Mr. Kanade has placed
reliance on the judgment of the Apex Court in the
case of Western Coalfields Ltd. vs. Manohar
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Govind Fulzele, wherein the Apex Court upheld
the forfeiture of gratuity only to the extent of 25%.
Learned advocate Mr.Kanade submits that, in
contrast, the present petitioner has forfeited 100%
of the gratuity amount without adequate
justification. Therefore, learned advocate
Mr.Kanade submits that the learned authorities
below have rightly passed the impugned orders,
and no interference is warranted by this Court.
Accordingly, the petition deserves to be dismissed.
7 Having considered the submissions advanced by the
learned advocates for the respective parties and
upon perusal of the reasoning assigned by both the
authorities below, certain undisputed facts emerge
from the record. It is evident that the respondent was
terminated from service following the initiation of a
departmental inquiry, by an order dated 07.05.2011.
Prior to the said termination, the respondent was
served with the first chargesheet on 02.02.2010 and
subsequently, with the second chargesheet on
07.07.2010. The articles of charges alleged against
the respondent are enumerated hereinbelow:
Charge No.02 Abuse or misuse of the Board's property/position.
Charge No.08 Negligence resulting in or likely to result in loss to
the Board/Company or inconvenience to the public.
Charge No.09 Theft, embezzlement, fraud, falsification of
accounts, tampering with official documents, breach
of trust, misappropriation, or dishonesty in
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connection with the affairs or property of the
Board/Company.
Charge No.10 Instances of disloyalty to the Board/Company or the
superiors under whom the employee is working.
8 On conclusion of the departmental inquiry pursuant
to the second chargesheet, a show-cause notice
came to be issued on 12.10.2011, calling upon the
respondent to submit an explanation with regard to
the proposed punishment of forfeiting the retirement
benefits, including gratuity. The respondent
submitted his reply on 21.05.2012, and on
considering the said reply and the contents of the
charges, the petitioner passed an order dated
03.11.2012 forfeiting the retirement benefits, namely
CPF (Company's Contribution), Gratuity, SVR, DBFC,
and leave encashment. It is also not in dispute that
no proceedings were initiated by the respondent
challenging the aforesaid order of forfeiture, which
was passed in the year 2012 and attained finality.
8.1 It further emerges from the record that, after a
lapse of eight years, the respondent filed Gratuity
Application No.35 of 2020 before the learned
Controlling Authority. The said application came to
be dismissed on 16.01.2021 by the learned
Controlling Authority on account of the
respondent's absence. At the time of filing the said
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application, the respondent had also filed an
application for condonation of delay, which is
reflected at Serial No. 1 in the list of documents
referred to in the order of the Controlling
Authority.
8.2 Subsequently, instead of pursuing adjudication
on the pending delay condonation application, the
respondent filed a review application along with
another application seeking condonation of delay
of 348 days. From the record, it transpires that
without adjudicating either (i) the delay
condonation application filed with the main
application, (ii) the delay condonation application
filed with the review application, or (iii) the review
application itself, the learned Controlling Authority
proceeded to decide the main Gratuity Application
No. 35 of 2020 on merits.
9 In the opinion of this Court, the learned Controlling
Authority committed a jurisdictional error in deciding
the main application without first adjudicating the
pending applications for condonation of delay and
the review application. On conclusion of the
departmental inquiry pursuant to the second
chargesheet, a show-cause notice came to be issued
on 12.10.2011, calling upon the respondent to submit
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an explanation with regard to the proposed
punishment of forfeiting the retirement benefits,
including gratuity. The respondent submitted his
reply on 21.05.2012, and upon considering the said
reply and the contents of the charges, the petitioner
passed an order dated 03.11.2012 forfeiting the
retirement benefits, namely CPF (Company's
Contribution), Gratuity, SVR, DBFC, and leave
encashment. It is also not in dispute that no
proceedings were initiated by the respondent
challenging the aforesaid order of forfeiture, which
was passed in the year 2012 and attained finality.
10 It further emerges from the record that, after a
lapse of eight years, the respondent filed Gratuity
Application No.35 of 2020 before the learned
Controlling Authority. The said application came to be
dismissed on 16.01.2021 by the learned Controlling
Authority on account of the respondent's absence. At
the time of filing the said application, the respondent
had also filed an application for condonation of delay,
which is reflected at Serial No.1 in the list of
documents referred to in the order of the Controlling
Authority.
11 In the absence of any adjudication on the
application for condonation of delay as well as the
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review application, this Court is of the opinion that
the learned Controlling Authority committed a
jurisdictional error in deciding the main application
without first determining the maintainability and
merits of the pending applications. It is true that
under the provisions of the Payment of Gratuity Act,
the employer is obligated to pay gratuity to the
employee within 30 days from the date of retirement.
However, if an application is not filed within the
prescribed period, the same is required to be
accompanied by an application for condonation of
delay explaining the reasons for such delay. Not only
was there this procedural irregularity, but the learned
Controlling Authority, while passing the impugned
order, also erred in holding that since the petitioner
first passed the termination order and subsequently
passed the order forfeiting the gratuity, such
sequence is not in consonance with the provisions of
Section 4(6) of the Act. At this stage, it is necessary
to refer to Section 4(6) of the Payment of Gratuity
Act, which reads as under:
"(6) Notwithstanding anything contained in sub-section
(1), -
(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
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be forfeited to the extent of the damage or loss so
caused.
(b) the gratuity payable to an employee may be wholly
or partially forfeited] -
(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
(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."
12 On referring to the aforesaid provisions, this
Court does not find any stipulation suggesting that
unless and until an order forfeiting the gratuity is
passed, termination of service cannot be effected. In
fact, such an interpretation would be contrary to the
statutory scheme. The relevant provision clearly
stipulates that in cases where an employee's services
have been terminated, the employer is empowered
to forfeit the gratuity to the extent of the damage or
loss caused by the employee.
13 In addition to the above, the learned Controlling
Authority has also placed reliance on the decision
rendered by the Apex Court in the case of Jaswant
Singh Gill (supra). However, it is pertinent to note
that the said judgment has subsequently been
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overruled by the Apex Court in the case of
Mahanadi Coalfields Ltd. vs. Rabindranath
Choubey, reported in (2020) 18 SCC 71, wherein
the Apex Court has observed as under:
"10.27 In Jaswant Singh Gill v. Bharat Coking Coal
Ltd. (2007) 1 SCC 663, it was held that the
provisions of section 4(6) of the Payment of Gratuity
Act, 1972 would prevail over the non statutory
Bharat Coking Coal Ltd. a subsidiary of Coal India
Ltd. Rules 34.2 and 34.3 and provisions of Payment
of Gratuity Act, 1972, were considered. It was held
that even if the disciplinary inquiry was initiated
before attaining the age of superannuation, if the
employee attains the age of superannuation, the
question of imposing a major penalty by removal or
dismissal from service would not arise. Once the
employee had retired and his services had not been
extended for the purpose of imposing punishment, a
major penalty could not be imposed. It was also held
that the rule framed by Coal India Ltd. are
nonstatutory rules, and in view of the provisions of
the Payment of Gratuity Act, 1972, they cannot
prevail. In the said case, the order of dismissal was
passed after the age of superannuation. It was found
that misconduct did not cover the grounds mentioned
in section 4(6)(a) for recovery of the loss, nor it was
the case of misconduct in which gratuity could have
been withheld wholly or partially in the exigencies as
provided in section 4(6)(b). We find it difficult to
agree with the said decision as Rules hold the field
and are not repugnant to provisions of the Payment
of Gratuity Act, 1972. This Court held that Rules
could not hold the field as they were not statutory;
thus, the effect of the rule providing of deeming
legal fiction as if he had continued in the service
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notwithstanding crossing the age of superannuation
was not considered. Apart from that, the validity of
Rules 34.2 or 34.3 could not have been decided as it
was not in question in the said case. The Controlling
Authority and the Appellate Authority ordered the
payment of gratuity. The main ground employed was
that in the order passed by the departmental
authority, the quantum of damage or loss caused was
not indicated, and it was not the case covered by
Section 4(6) (a) and 4(6)(b). A writ petition filed by
the employer was dismissed. However, the Intra
Court Appeal was allowed, and it was opined that
the Controlling Authority could not have gone into
the validity of the dismissal order and forfeiture of
the gratuity since it was not an appellate authority of
disciplinary authority imposing the punishment of
dismissal. Thus, the jurisdictional scope in the
Jaswant Singh Gill case (supra) was limited. We are
unable to agree with the decision rendered in
Jaswant Singh Gill case (supra) inter alia for the
following reasons:
(i) The order of termination was not questioned, nor
the authority under the Payment of Gratuity Act,
1972, had jurisdiction to deal with it.
(ii) The validity or enforceability and vires of service
Rules 34.2 and 34.3 were not questioned.
(iii) The Controlling Authority under the Payment of
Gratuity Act, 1972, had no jurisdiction to go into the
legality of order of the disciplinary authority.
(iv) The scope of the case before this Court was
confined to validity of order of Controlling Authority
and to questions which could have been dealt with
by Controlling Authority.
(v) No fetter is caused on the efficacy of the Rules by
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Section 4(1) and 4(6) of the Payment of Gratuity Act,
1972. The Rules need not be statutory to have
efficacy as they are not repugnant to the Payment of
Gratuity Act, 1972. This Court did not consider the
scope of provisions of the Gratuity Act and provisions
of Rule 34.2, providing legal fiction of employee
deemed to be in service even after superannuation.
(vi) The Controlling Authority had no jurisdiction to
deal with Rules 34.2 and 34.3 or to pronounce upon
validity thereof or of dismissal. Thus, the
observations made, traveling beyond the scope of the
proceedings, cannot be said to be binding and cannot
constitute the ratio with respect to continuance of
departmental inquiry after superannuation and what
kind of punishment can be imposed by an employer.
The jurisdiction of authority was only to consider
payment of gratuity under Section 4(6) of the
Payment of Gratuity Act, 1972.
Thus, we overrule the decision in Jaswant Singh Gill
(supra).
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11.In view of the above and for the reasons stated
above and in view of the decision of three Judge
Bench of this Court in Ram Lal Bhaskar (supra) and
our conclusions as above, it is observed and held that
(1) the appellant - employer has a right to withhold
the gratuity during the pendency of the disciplinary
proceedings, and (2) the disciplinary authority has
powers to impose the penalty of dismissal/major
penalty upon the respondent even after his attaining
the age of superannuation, as the disciplinary
proceedings were initiated while the employee was in
service.
Under the circumstances, the impugned judgment
and order passed by the High Court cannot be
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sustained and the same deserves to be quashed and
set aside and is accordingly hereby quashed and set
aside and the order passed by the Controlling
Authority is hereby restored. However, the appellant
employer is hereby directed to conclude the
disciplinary proceedings at the earliest and within a
period of four months from today and pass
appropriate order in accordance with law and on
merits and thereafter necessary consequences as per
Section 4 of the Payment of Gratuity Act, 1972, more
particularly Subsection (6) of Section 4 of the
Gratuity Act and Rule 34.3 of the CDA Rules shall
follow. The present appeal is accordingly allowed.
However, in the facts and circumstances of the case,
there shall be no order as to costs."
14 Considering the overall circumstances of the case,
this Court is of the view that in the absence of any
challenge to the order passed by the disciplinary
authority forfeiting the amount of gratuity, the
learned Controlling Authority could not have
interfered with the said order, particularly when it
was passed after a full-fledged departmental
inquiry and in adherence to the principles of
natural justice.
15 Resultantly, the petition deserves to be allowed,
and is hereby allowed. The impugned order dated
13.06.2022 passed by the learned Controlling
Authority, as well as the order dated 06.02.2023
passed by the learned Appellate Authority, are
quashed and set aside. The amount as deposited
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by the petitioner pursuant to the impugned orders
shall be refunded to the petitioner after the expiry
of the statutory period of appeal. Rule is made
absolute accordingly.
16 In view of the judgment rendered in the main
petition, Civil Application (For Vacating Interim
Relief) No. 1 of 2023 does not survive and stands
disposed of accordingly.
(M. K. THAKKER,J)
M.M.MIRZA
